Despite the fact that the recession has turned around and is showing growth in certain sectors, consumer morale remains low, which can be seen in the slow start to the holiday season.
McKinsey & Company, a multinational management consulting firm, surveys a sample of 1,000 Americans once or twice a year to develop its Consumer Sentiment Survey and has done so since August 2008.
The current survey found that many consumers are still worried about losing their jobs (39 percent) or are living paycheck to paycheck (40 percent) – with both of these numbers up from 2012.
According to an article by McKinsey & Company, “Americans at all income levels have yet to return to their prerecession positive feelings about the country’s economy. Today, just 23 percent say they are optimistic about the economy, down from 27 percent at the beginning of the recession in 2009.”
Americans are less focused on decreasing their overall budgets, but are still saving through decreases in their purchasing of high-end brands and making one-stop shopping trips. With consumers being more price conscious, 55 percent are still looking for ways to save money, whether it be through coupons, comparison shopping or buying items in bulk.
Type of Products
Recession habits die hard, as many consumers are still purchasing private label and store-brand products. “Throughout the recession consumers saved money on grocery and household products by trading down to less expensive brands, often private-label or store brands…Nearly three-quarters say they do not intend to go back to purchasing more expensive brands.” The main reasons they are not returning to pre-recession habits are because private-label products offer a better value for the money and are of relatively high quality. They find that buying the expensive, name brand product is not worth it.
Consumers are widening their range of stores and frequent a combination of retail outlets. “Forty-eight percent of American consumers say they have spent more of their household budget online in the past 12 months; 34 percent have done more shopping at dollar stores, and 32 percent, more at club stores.”
Habits are Here to Stay
While consumers had to adapt to survive during the recession, they adopted certain shopping behaviors and have no intention of returning to their old ways. Forty percent of consumers say they will probably never go back to their pre-recession spending habits, 29 percent have new attitudes on spending and 24 percent “claim that their opposition to increased spending is the result of a change in their economic situation.”
Even if people do want to return to pre-recession spending levels, one-third are waiting to pay off debt or rebuild savings and one-fourth “are waiting until they are back at their old income levels.”
To read more about the study, click here.