The Global Financial Crisis

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The global financial crisis has brought wide-ranging changes to consumer spending behaviour and consumption patterns throughout the world with the economic downturn impacting on the spending and purchasing power of people. The findings of a study conducted by Booz and Company in 2008 on consumer spending behaviour revealed that, firstly, the unprecedented confluence of the dramatic rise in oil prices, the substantial deterioration of housing values and the credit crisis, affected the overall economy and significantly changed consumer behaviour. Secondly, many consumers had already made significant cuts in their expenses and were projecting to make deeper trade-offs given the pessimistic and depressing economic forecast. Thirdly, although the low-income earners had made deeper trade-offs, yet people of all age groups and income levels have made similar adjustments and compromises across main spending areas. Fourthly, these analogies are understandable given that the majority of the local populations are exposed to similar drivers of change and spending allocations such as rising mortgage rates, declining saving funds, increasing prices of basic goods and services and many other spending considerations. However, to understand the motivators that determine consumers’ behaviour and consumption patterns, people should not conceive consumers in abstract terms. Building on Maslow’s theory of motivation, a consumer is a human being that uses goods and services available to satisfy needs and wants. People’s needs and wants will depend on which level of motivation they have reached. Besides, people do not spend their money aimlessly, they spend money on goods and services that appeal to them and according to their financial means. For exa... ... middle of paper ... ...e only ticking away a financial time bomb. For example, the recession in 2008 was mitigated because the Americans continued to spend, but it was not enough to stave off the global financial crisis. Almost all economists agree that there is no long-run paradox of thrift, and they advise that instead consumers should change their spending behaviour by paying down their credit cards. Families in almost all countries, owing to the crisis, have not only changed their consumption patterns and spending behaviour, but have also changed their lifestyle. Many people are opting for a semi-sustainable lifestyle such as in some regions, they have started community gardens where they grow fruit and vegetables. The changes are portrayed as gloomy pictures for the economy. However, we can question whether they are really gloomy or rather optimistic in terms of sustainable living.

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