The current economic environment is declining. There's no big surprise there, as many companies – if not all – are feeling the heat of the COVID-19 pandemic.
Mintel has released new research that analyzes the current economic environment compared to that of the Great Recession and provides insight into the economic indicators that will play a role in predicting consumer spending in the coming months and years.
The differences
The major recession was largely impacted by failures in the real estate and banking sectors. However, today's crisis is beyond human control and one that we still cannot resolve.
In addition, the financial system is fundamentally solid today. Americans are well aware of the economic impact, and consumers have adopted more conservative habits due to lifestyle pandemics and skyrocketing unemployment claims.
"While the economic impact of COVID-19 is unfolding, Americans are concerned not only with immediate concerns about physical health and lifestyle changes, but also with longer-term concerns about their financial health," said Fiona O & # 39; Donnell, director by Mintel Reports US.
“Expect consumers to evaluate their lifestyle and reduce discretionary spending. As the economic recovery depends on COVID-19 containment, consumer confidence will lag, followed by a sharp decline later this year. "
Future predictions
After analyzing the 2007-09 recession, Mintel research suggests that four economic indicators play an important role in predicting consumption patterns: unemployment, trust, income and savings.
There are not many factors that are as influential to consumers as the unemployment rate.
“Less working Americans mean less spending and focus on necessities. This downturn promises to change consumer priorities beyond the recovery period. The perception of value will change and consumers will wonder whether products with premium prices are worth the additional costs.
“The common sectors like eating out, traveling, entertainment outside the home and others that support personal enjoyment have been largely eliminated and consumers have learned that they can do without it. Other previous “needs” are being challenged as the area of life becomes narrower and more with less becomes the lens through which consumers need to focus their decisions, ”concludes Ms. O'Donnell.
