As we start the New Year, there are high hopes to come out of the recession, but the recession’s effects may have changed consumers habits indefinitely. And possibly for the better.
“Once the dust settles from the economic crisis of 2007-2009,” argues William Galston, a researcher and former policy advisor to President Clinton, “we are likely to enter a period of new normality, with lower household debt, higher personal savings, and less consumption as a share of Gross Domestic Product.”
Together with new financial habits is a new focus on elevating experiences over things. Some individuals are “working longer hours, but a larger proportion are spending additional time with family and friends, gardening, cooking, reading, watching television and engaging in other hobbies.”
The recession gave consumers a new focus on buying less, doing more. A recent poll found nearly half of Americans said they were spending less time buying nonessentials, and more than half are spending less money in stores and online. It didn’t matter that you couldn’t afford a new dress, since your neighbor was in the same position, and keeping up with the Joneses became less of priority as consumers shifted to keep up with the things that mattered.
“With the recession slashing the Montoyas’ workload and income by more than half,” just one of the many families affected by the recession, the New York Times reports, “their priorities have shifted from products to activities.”
Going to museums, attending a yoga class, and picnics at the park are all areas that have increased in time-use surveys. And this means as a nation, we may not have as much money, but we’re pushing towards more happiness. “Psychologists have been saying for years that shared experiences like vacations lead to more long-term happiness than the latest bauble,” the Times reports.
“The ‘new normal’ [is] the idea that when income, credit and confidence return, Americans will not return to our free-spending ways,” reports the Harvard Business Review, and while the author of that article believes that Americans will spend lavishly again, perhaps there is some good coming out of the recession as well.
What do you think? Have you been doing more, spending less? Will your behavior change as the recession ends?
I agree with this assessment. I think we are entering a new normal. People want to make memories more than they want to make debt, and I think Gen Y is helping to shift this trend. That’s why we travel so much, build communities of friends online, and try desperately to find jobs we love.
It’s a new set of priorities. We spend money on what we love, and we’re learning that we don’t love a bunch of crap in a house as much as we love dinner with friends, a weekend in Vegas, or a fun kickboxing class. So, we skip out on cable or buying DVDs or new clothes so we can have fun.
At least I do. And, I buy coffee at Alice so when I drink it with friends, I’m killing two birds with one stone – saving money AND creating a memory. :)
@ Sam – Haha, thanks for the shout-out! I agree, there’s a trending towards experiences over things as to what’s important. I think Gen Y probably started the trend, but the recession really made it mainstream for everyone.