Pessimistic Consumers Still in Recession Mode

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Pessimistic Consumers Still in Recession Mode


NEW YORK -- Although the economy shows some signs of marginal improvement, the vast majority of Americans believe the country is still in a recession, and most consumers are continuing many of their recessionary shopping behaviors.

According to the Nielsen Global Consumer Confidence Survey, 92 percent of U.S. consumers say the country is in recession, said James Russo, vice president, Global Consumer Insights, for The Nielsen Co., speaking at a Nielsen Regional Client Summit on Tuesday.

Russo cited several 2010 statistics to explain the dour state of the American consumer:
• 8.3 million job losses.
• More than 4 million lost their homes.
• Record low consumer confidence.
• Retail sales up only 1.1 percent in 2010.

He added that things aren't getting much better in 2011, citing rising gas and commodity prices, slow job growth, continued weak consumer confidence and year-to-date retail sales growth of just 0.1 percent.

"The economy seems to be marginally better, but that improvement is not being recognized by consumers," said Russo.

He noted that a sustained recovery is "all about job growth" and that jobs creation continued to stall in 2011. "A record number of people are still unemployed," he said. This unemployment appears to be the main driver of consumers' gloomy feelings about the economy.

Unemployment and under-employment is particularly hurting young people, and this will have a long-term negative impact on income across the nation, according to Russo. In addition, Hispanics (11.3 percent) and African-Americans (15.9 percent) have been hit harder by unemployment than white Caucasians (8.1 percent), he said.

Globally, U.S. consumers are more pessimistic than those in other countries. According to the Nielsen Index, global consumer confidence in the third quarter of 2011 was an 88, one point lower than the previous quarter. In the United States, consumer confidence fell one point to 77 in the third quarter of this year.

Russo did point out that rising food prices are becoming an increasing concern in emerging markets, with countries like Pakistan and India reporting that their households devote almost half of their total spending on food.

As far as consumer behavior is concerned, the Nielsen research shows that some spending behaviors that increased considerably during the recession of 2008-2009 are easing, but several other behaviors remain in place. For example, prior to the recession, 66 percent of consumers said they were combining shopping trips more often, and 24 percent said they were shopping at one-stop supercenters. Those figures increased to 75 percent and 29 percent, respectively, during the recession, but dropped back to 66 percent and 24 percent post-recession.

On the other hand, activities like eating out less, staying home more, buying value brands and using coupons appear to have become a part of what is often referred to as "The New Normal." Prior to the recession, 36 percent of consumers said they were eating out less often, 36 percent said they were staying home more, 19 percent said they were purchasing value brands, and 22 percent said they were using coupons. During the recession of 2008-2009, those figures skyrocketed to 75 percent for eating out less, 48 percent for staying home more, 34 percent for buying value brands and 35 percent for using coupons.

In the supposedly post-recession period, those behaviors appear to be sticking: 46 percent said they were eating out less, 40 percent are still staying at home more, 31 percent are buying value brands and 37 percent are now using coupons.

Russo predicted that a modest growth forecast will keep unemployment high in 2012, meaning consumers will likely continue their pragmatic post-recession shopping habits.