FORBES: Tuning Into The Recession Mindset

[El Pinko]

http://www.forbes.com/opinions/2008/02/14/unsolicited-advice-recession-oped_meb_0215unsolicited.html


Tuning Into The Recession Mindset
Marc E. Babej and Tim Pollak 02.15.08, 6:00 AM ET

Welcome to the year of reckoning: Unemployment is on the rise. Home ownership has experienced the biggest one-year drop since tracking began in 1965. The value of homes--most Americans' biggest asset--continues to slide; the Federal Reserve is reporting an abrupt decline in consumer credit-card borrowings.

Little wonder only 19% believe the country is headed in the right direction. The government may not yet have declared a recession, but millions of households have. For marketers, all this adds up to a big question: How do people act differently when they see dark clouds on their financial horizon?

When the economy is strong, consumers are optimistic about their own prospects--and act accordingly. They are willing to spend, invest or run up debt, assuming the future will be better than the past. In a downturn, assumptions about the future are turned on their head, as more and more people fear the foreseeable future could well be worse than the past. Right now, there's plenty of reason for consumers to be pessimistic. Increasingly, their behavior reflects this souring mood.

No two downturns are exactly alike, and neither are consumer reactions. But there are patterns that cut across recessions and generations of consumers. It's time for those of us who battled through the last significant recession in the early 1990s to remember what it was like, and for those of us who were too young to become aware. The pivotal marketing question: How will this recession affect consumer behavior?

[DaveJ]

1. Oh, No! We may have smarter consumers.

So people are less likely to sign their lives away on overpriced real estate, and most know credit cards are evil. I hope this trend continues and that the market adjusts.