According to a Raddon Financial Group survey, consumer behaviors and outlook have changed significantly since the Great Recession, which many experts agree spanned from December 2007 to June 2009. Yet, the recovery since that time has not seen GDP growth at the same levels the U.S. experienced in the 1990s and mid-2000s, though it has grown steadily at around two percent per year.
Despite being more than seven years from when the recession was technically over, the weak economic recovery since that time still causes consumers and businesses alike to operate more cautiously than they did prior to the recession. In fact, as stated in a recent Raddon Report article, “by 2011, 69 percent of all consumers said they personally saw no evidence the recession was over.” As recently as last year, 44 percent of consumers had the same response.
The article also noted that many of the pessimistic consumers tend to be “lower-income consumers, who earn less than $50,000 and make up 50 percent of the population across all age groups.” Since the recession, these consumers have spent, saved, and borrowed less than others. From their survey results, the Raddon group observes that the Great Recession continues to inform consumer behavior today, particularly as higher percentages of consumers are uncertain about the recovery from the recession.
Even so, many high-earners with incomes above $125,000 are increasingly optimistic. Given these earners represent a much smaller portion of the population, 13 percent, banks and other financial institutions need to make serious efforts to combat the uncertainty that other consumers hold. The article notes that many young people are operating from a notion of scarcity, hearkening back to the Greatest Generation, who lived through the Great Depression and World War II.
In order to make inroads with these consumers, banks and financial institutions must be more proactive in advising them and providing solutions to reinforce a feeling of stability. If your advice and product offering helps them to feel confident in their choices, these consumers can become a solid part of your customer base.