Hesitant consumers, low expectations could be the new norm

As New York marked the eleventh anniversary last week of the terrorist attacks of 9/11 with a more restrained memorial than in previous years, many Americans may have felt that national anxieties tied to the event have begun to fade.

Not so for Marianne Bickle, Ph.D., Director of the Center for Retailing at the University of South Carolina and author of The Changing American Consumer.  Bickle argues that the events of 9/11 changed buyers’ behaviors and damaged American consumer confidence in ways that are still apparent, and may be difficult to repair.

“We felt the threat,” says Bickle.  “People understood that our country changed dramatically, and for many people it was the first time in their lifetime they’d heard stories from their grandparents and felt they could relate.”

Bickle says these fears grew rapidly as Americans watched friends lose their jobs and began to contemplate mounting personal debt not in terms of when, but whether, it could be repaid.

More than a decade later Americans continue to struggle to imagine a healthy financial future. U.S. consumer confidence for August 2012 was measured at 60.6, as low as it has been since November 2011, according to The Conference Board, a New York-based independent think tank that provides organizations with economic data and analysis.

“American consumers say it still feels like a recession, even though the recession officially ended in June 2009,” says Kenneth Goldstein, an economist with The Conference Board.

But though Bickle maintains that this ongoing dip in confidence is unique to this post-9/11 economy, not everyone agrees.

“There are some narratives out there that claim that consumers are responding to a slower economy differently than they would have in the past,” says Paschal Noel, a former Senior Policy Advisor at the National Economic Council.  “[People] are comparing this to other recessions, as opposed to other similar types of recessions.”

Noel argues that unlike recessions characterized specifically by soaring interest rates and plummeting stocks, a recession marked by unemployment, the collapse of the housing market, and rising personal debt carries a greater emotional impact.

“Compared to recessions with similar symptoms,” says Noel, “people are acting exactly as we would expect.”

While back-to-school and the approaching holiday season may create a more optimistic outlook among consumers in September, Bickle says that for most shoppers, clipping coupons and buying generic products are habits that will continue.

“It’s not an outlook, it’s a cultural shift,” she says.  “People might go back to spending, but they will never forget that this will happen again.”

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