Consumers Have Learned from the Recession

September 13th, 2009 • Related • Filed Under • by trisha

It may not be big news that consumers have learned some valuable lessons from the recession, but it might be surprising at cash how quickly they have adjusted to economic conditions. A recent report shows that people have learned to take charge of their finances more aggressively. Consumers are now saving more and cutting spending across the board. The personal savings rate is up to 4% compared to 0 just a year ago. Financial counselors are inundated with clients. All of this proves the resilience of the American consumer and the lengths that they will go to in order to adjust their lifestyles to the financial situations in which they find themselves.

New Savings Emphasis

The one driving factor towards higher savings is the fear of a lost job. This motivation is providing the fuel for the current savings rate, which economists see going up further in the coming months. And even though they are saving less than they were after the last major recession in 1982, it is a welcomed sign.

Consumers are reducing debt to make room for saving. This is good because even though the standard savings account does not offer much in terms of interest, it is better than allowing unsecured loans to eat up money month to month. Also, this is an important trend because homeowners are recognizing that because of the housing market, they are not going to be able to rely on rising property values as a source for loans in the near term.

Borrowing Changes

People are fed up with credit cards and are shedding their accounts in record numbers. Debit card usage is at all time high levels. Most consumers feel like they have been shut out of the credit market and are seeking different ways to obtain money for the things that they need. They are turning to credit unions in droves because they offer lower rates and a less restrictive attitude when it comes to loans, etc.

Also, the newest rage is peer-to-peer lending in which several Internet based companies become an arbiter between family and friends who decide to loan money to one another. This helps keep the process clear and understandable as well as helping to insure that the borrower repays any loans made.

Less Spending Attitudes

Even though spending is down and expenses are cut to the bone, that trend will change as the economy improves and consumers see more money in their pockets. That will help provide a recovery that is desperately needed by businesses that depend upon consumer cash.

In a matter of months, most consumers will look back on the economic recession with lamentable fondness. Here’s hoping however, that they will not soon forget the lessons learned.