Despite the news media trying to sell airtime by pitching the Recession as the second Great Depression, this country has seen far worse in terms of its economy. If one has ever studied the Great Depression and come across articles on bank runs, bread lines wrapping around stadiums, or the 24%+ unemployment rate [1], they will quickly see past the media’s reliance on fear as a strategy for making money.
However, one comparison you can draw between the two time periods is that both had an almost immediate and lasting effect on consumerism in America. This could be in the form of regulations—such as the establishment of social security during the Great Depression—or in a paradigm shift in people’s shopping habits.
Take a look at 5 ways this Recession has permanently changed consumerism in America.
- Shocking Credit Card Disclosures: Do you remember when those first pharmaceutical ads came on the air that had to disclose their side effects? I was around 10 years old, and remember my jaw dropping as one touted “headaches, nausea, diarrhea, occasional memory loss…†I had the same reaction the other day when I opened up my BillMeLater account statement ($123—long story) with the following information: “If you make no charges using this account and each month you pay only the minimum, you will pay off the balance shown on this statement in about 14 months, and you will end up paying an estimated total of $139.00â€. Let’s take a moment to really let that sink in. The new credit card laws [2] require the credit card company to calculate for me how much they will rip me off by paying the minimum payment only—a payment that they, themselves, set. As if that were not enough, the statement also includes the following Minimum Payment Warning, in bold, “If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance.†No longer can Americans put a cloak over their heads because the credit card companies are now calculating your minimum payment and interest rates for you.
- Freebies a Cost of Doing Business: Freebies have always been a way to get a consumer into the doors of a business and hopefully spend on other merchandise, such as VS free panties, or free Ben and Jerry’s Cone Day. But now giving away free products has become an expectation on the side of consumers—a cost of doing business. Don’t expect consumers to try your new product unless you offer a rebate, a free gift, or give the first one away, period. We’ve seen this in the last three years for everything from new music out by famous artists [3], to free meals from KFC and Boston market, hundreds of free digital photos [4], and free 5-lb. bags of dog food. Also, now consumers expect to be paid for their loyalty by giving reward points for buying everything that they need, including toilet paper, coffee, and diapers.
- Pay Later, Buy Later: There has been a hike in consumers who want to buy the item only when they can pay for it [5], instead of “buy now, pay laterâ€. Although you might think layaways are from your mother’s generation, they are now being advertised on commercials for Sears [6], Kmart, and other stores.
- Eruption of Do-It-Yourself Culture: Doing things yourself saves a lot of money, but it has become big business in the last several years. Home Depot, Lowe’s, HGTV, and DIY Network are major players now. Never before did I think my husband and I could (or would attempt) to retile our bathroom, refinish our wooden cabinet, or remortar our fireplace, but thanks to this growing culture and information, I have confidence in our abilities to do so.
- We’ve Taken the Personal out of Personal Finances: Have you noticed how un-personal Personal Finances has become? With so many people in debt and out of work, Americans are much more open about disclosing their information. It has become quite savvy to be frugal and to save money [7], and so people are eager to share not only their bargain finds, but the price tag as well. Pretty soon it will be “single, white female, aged 27, $XX debt, $XX,XXX income, $XX assetsâ€, and seeing each other’s salaries could be the norm on social media sites such as Facebook. Companies who keep co-workers’ salaries private in order to keep overhead costs down beware!
What other changes have you noticed?