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This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
The global pandemic has disrupted lives and businesses around the world. From saving and investing to deciding where and how you want to spend money, your world has likely changed, too.
Will it change for good? Will we go back to our previous spending and saving habits?
Recessions can cause widespread ripples in the way we manage money. When the economic picture is uncertain, people are often hesitant to spend on nonessentials and may tighten their budgets in case their own employment or housing situation is threatened.
During the 2008-2009 recession, for example, many consumers switched from expensive or premium products to lower-cost options. Research from that time* indicated that people often chose to continue buying the cheaper product even after the recession ended. Businesses either adapted to the change in demand (resulting in a rebound or recovery)—or they didn’t.
Fast forward to today. We are at the start of a new recession. While people are understandably worried about spending during economic uncertainty, the reason for the recession—a global pandemic—adds additional complexity.
So far, consumer optimism is decreasing.** While many are adopting new ways of doing business—digital or low-contact options rather than face-to-face transactions—overall buying and consumption is down and still focused mainly on essentials.
Over the past few weeks, we’ve asked our investors how their lives have changed. How do your answers compare?
With businesses at various stages of reopening, your options and plans for spending may be at a crossroads.
Maybe you’ve changed the way you think about paying for goods and services and where you choose to do business.
Many households are managing money differently, for current expenses but also for future goals.
In an additional survey, two-thirds of respondents expressed concern that their future might be upended in a recession. From not being able to provide for others the way they’d planned, not retiring on time or making lifestyle changes, their worries reflect the overall economic picture.
Not sure of your next steps? We can help. Your financial future is important, and you can count on us to be there along the way.
* “How the recession has changed US consumer behavior.” McKinsey Quarterly. December 1, 2009.
** “Consumer sentiment is evolving as countries around the world begin to reopen." McKinsey Quarterly. June 5, 2020.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
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