Throughout this recession, a fair number of thought leaders have opined on whether American consumers have been permanently (and perhaps beneficially) changed in the process.
Here are some interesting related reads: Time Magazine’s “The Great Recession – America Becomes a Thrift Nation,” Time Magazine author Kurt Andersen wrote a feature article and later a book, “Reset: How This Crisis Can Restore Our Values and Renew America,” and ABC “Finance – Americans Adapt to the New Normal.”
Because there are so many conflicting trends happening at once, it will indeed be interesting to see how things turn out.
1. Our leaders denied the recession even existed for a whole year, and a few months after the Q4 2008 abyss began talking about “green shoots” and “over.”
2. My audiences (mostly doctors and healthcare professionals) remain incredibly skeptical – some laughed out loud in New York when I mentioned Ben Bernanke’s recent statement that the recession is “very likely over.”
3. Real unemployment is approaching 20% when you consider people who have given up or work part time.
4. People are finally beginning to be able to pay down debt (good) because they aren’t buying as much stuff (bad?).
5. We know that consumers still lust after big TVs, because it is just so hard to resist when your neighbors buy new stuff. So there could be a consumer tendency to spend again (too much, too fast, too soon), especially among the least educated consumers who can ill afford them.
6. Yet many people recognize that they spent way too much in the past, and are now uncertain about their futures. I for one predict a really poor Holiday shopping season as a result (and I am supposed to be an ever-optimistic marketer).
7. The Obama administration has seen to it that no one has felt any pain, including speculators and the people who got us into this mess. We solved the problems created by outlandish spending by … spending far more.
8. According to my economic hero Nouriel Roubini (who saved me a bundle by predicting our collapse last September), the stock market went up way (“too fast, too much, too soon”) and is based on near zero interest lending, which therefore has speculators spending other people’s money at little cost or risk.
9. In “The Great Depression Ahead,” Harry Dent predicted a depression about 2010, not due to current issues, but the fact that Baby Boomer spending will predictably slow as they age.
So the question remains, are consumers really permanently altered?
If Bernanke is right and the recession really is over, most consumers will quickly forget what they have learned and go back to spending. No doubt about it. Most simply haven’t experienced enough pain.
However, if Roubini and Dent are right, “We ain’t seen nothin’ yet.” Unemployment will continue to reign, and the air will begin rushing out of the hyper-inflated economic balloon as Holiday spending crashes on the rocks before it starts.
I expect the latter, and predict a very bumpy ride.
So eventually, yes, consumers will be permanently altered in their spending habits, for good and ill.
Which of course will make healthcare marketing more challenging for providers.
Maybe I should look at it as job security…