When AdWeek is publishing articles about the new consumer attitudes you know there has been a pronounced shift in worldviews. In an article titled Boomers Caught in Squeeze Play the new spending patterns are evaluated. Lets take a look -
American consumers have no recollection of life in the Great Depression. Not only are most simply too young to remember it, but for the last quarter century they've lived without extended economic hardship, becoming ever more acquisitive in a world of instant gratification and easy credit. No one knows how long or severe the current downturn will be.If having money in the bank worth more than a $4 cup of coffee? Is having no HELOC better than having a late model vehicle? During the bubble the answers were different then they are now.
The circumstances of this recession are unprecedented in the history of modern consumerism: For a generation that has substituted rising home equity and stock prices for personal savings, the current economic meltdown -- with the value of the Dow Jones Industrial Index plunging 40 percent from its peak and $4 trillion lost in home equity -- has been psychologically wrenching after a quarter century of unquestioned prosperity.
"This is not a normal recession. This is a tectonic, structural shift, a global realignment," says Umair Haque, director of Havas Media Lab. "The post-war industrial era was the era of production. Now we're seeing the birth of the real 21st-century economy and marketing has to adapt. We'll see a world where consumption [will] slow -- especially in developed countries where there will be a shift from consuming to saving -- and production will slow."
Gallup chief economist Dennis Jacobe concurs that "a fundamental change is taking place" in the behavior of U.S. consumers, even if it's not clear how permanent it will be. While gas prices have dropped 57 percent since peaking last July, cheaper petrol has done little to loosen consumer purse strings. And for more affluent American households, their declining confidence and spending track with a time line that started last fall with Lehman Brothers' bankruptcy filing, and worsened with the once-unimaginable sale and bailouts of troubled financial institutions that quickly followed.
"The last cataclysmic event was 9/11, caused by a terrorist attack. It was patriotic to get out and shop," says Alison Burns, global client services director, JWT, New York. "This downfall is of our own making -- greed, mismanagement and all sorts of things much closer to home. Now it's not patriotic to go shopping. It's all about being prudent, back to basics, valuing the things we have more highly."
[ Ben Kline, chief strategy officer at Allstate agency Leo Burnett,], whose agency works for McDonald's, adds: "The 'apex predators' of categories that didn't add enough value as consumers traded up are going to be in trouble. People are realizing they don't need a $4 latte; $4 goes further at McDonald's."
And notice the huge shift of patriotic behavior, once we showed pride in our country by going out shopping every chance we had. Now we are good Americans when we don't.