The financial crisis that caused the recession caused consumers to buckle down on their spending habits. The three stages that was heavily influenced from the recession were consumer pre purchase issues, purchase issues and post purchase issues. The mind of the consumer took a different approach in how they spent their money. Many looked for bargains and the best buys on food and product consumption. Brand names were not as important to the consumer as much as surviving the crisis.Consumers that found that purchasing the same product at a lower price still met the basic need of survival (Mckenzie & Schardrodsky, 2011). After the financial crisis was over in 2010 the government took action and help increase consumer consumption by lowering
More recently, the recession impelled many bricks-and-mortar retailers towards a damaging focus on discounting that eroded not only many stores’ price positioning but also any point of differentiation or exclusivity.
More often than not, Target’s products fall under the consumer discretionary category. Thus, the company is vulnerable to macroeconomic forces— consumer spending trends, employment and income, and GDP (gross domestic product) growth rate. After a failed attempt to expand into Canada, Target’s operations are limited to the United States market. This makes the company’s financial performance more vulnerable to our fluctuating economy. It is primarily these macro forces, in the recession and thereafter, that forced Target to shift towards an affordability focus in all of its product lines. However, these macro forces, in the betterment of the state of the economy, also provide Target with the opportunity to refresh its product offerings according to the tastes and preferences of its consumers, while continuing to offer a relatively low price point, regardless of the product area. In this way, Target is shifting from employing a production concept, in which its main focus is to sell products at a low production
Max: Hi I’m Max Lessins. This is Crash Course for economics and today we’ll be discussing the Great Recession, focusing on the fiscal and monetary policies used to recover from the 2008 economic meltdown.
Folgers now finds itself in an era where price-cutting for consumer goods in general is rampant. Consumers are buying cheaper brands and fewer units of many goods. Consumers have made the most changes so far in high-expenditure, less structural consumables: leisure (including dining out), shopping, and driving. (Leinwand, Moeller, & Shriram, 2008)
First, I want to give you a little background on the Financial Crisis of 2008/2009. The Financial Crisis began in December of 2007, and by the fall of 2008 the economy was in a huge downfall. This all began in August of 2007 because of defaults in the subprime mortgage market, which sent a shudder through the financial markets. The former chairman of the Federal Reserve described the crisis of 2008/2009 as a “once-in-a-century credit tsunami”. Many firms, including commercial banks, Wall Street firms, investment banks, all suffered significant losses and eventually went bankrupt. This caused households and smaller businesses to have to pay higher rates on the money that they borrowed. This downfall wasn’t just
The complexities and the uncertainties of the government spending leave consumers in a world of dubiety and lead to declines on their spending and investment. The governments need to provide simple and elegant solutions in response to the recession. The consumers need to understand these solutions which would allow them to
The Great Recession of the 2000’s is something many of us have been affected by in some way or form. From the real estate bubble to the acts of major firms on Wall Street-there were numerous factors that lead to this recession. The United States Government is to blame in large for what happened to the economy in the early part of the 2000’s. Major firms such as Merrill Lynch, Goldman Sachs, and AIG tried to used the failing economy as a huge paycheck to their CEO’s, payouts made partially by the US Government’s bailouts. The government should have allocated money to the people who were struggling, not continue to feed the “hand that bit them.”
Firms cut back on purchases of produce goods and the consumers cut back on the purchases of consumer goods (Galbraith 117). This uncertainty mixed with the stock market crash created the biggest recession America has ever seen.
Everybody in the United Stated was affected by the recession that began in December of 2007 and spanned all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. “The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession”. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses
To some extent that was the case, consumption did increase for a short period of time after the Fed's Quantitative Easing (QE). 2010 and the first half of 2011, saw some good
UK government was very swift in its response the financial crisis. Various measures were taken to address the economic anomaly that came with the crisis. These range from various monetary policies to fiscal policies. Some of these policies are discussed below:
On the 26th of November 2001, the National Bureau of Economic Research, declared that after ten years of economic expansion, the United States was in a recession as of March 2001 (Coplan 9). During the last quarter of 2001, the United States experienced a terrible tragedy; the 9/11 terrorist attack. However, economists believe that even if the terrorist attack had not taken place, the recession would have still been present, but it did in fact delay recovery. The recession of 2001 was by far different than all the other recessions. It was in fact, better than other recessions because the 2001 only lasted a quarter. Real GDP barley changed and the unemployment rates slightly rose (Nordhaus 2). It was found that banks have improved their performance during the recession, they were prepared for the worst this time around. During the 1990s, risk management became an important factor for banking discipline. Using risk managements, it gives the economy a potential to increase the stability. Thereby, banks benefited from an environment that rapidly declined short term interest rates, which enabled them to borrow at a lower cost (Schuermann 2). These risk managements played an important factor during the recession while impacting the United States economy in a positive manner.
During a recession, the value or price of goods and services tend to fluctuate based on consumer’s ability to purchase. Furthermore, this action often leave producers in a position of not knowing whether he or she will be able to sale their current stock. One can conclude that the over stocked good will be sold for a much lesser price. But, the next season I believe that producers of a good like oranges will grow less, because fewer consumers will be able to afford it. Therefore, this makes income and demand related, which means that increased income will cause demand to rise and that a decrease in income will cause demand to fall.
Another explain of the government trying to “stimulate” the economy would be the increase of tax credits for homeowners, parents and students, that was also done right after the 2009 recession. These credits would give additional money at the end of the year when filing taxes. I’m not a homeowner or parent, but as a student, the school credit was very beneficial. This helped with the additional cost that came a
The recent recession has hurt the entire retail market and regaining profits will be a constant challenge for the entire industry. In order to remain competitive, Ann Krill states,” value and versatility have become very important. She needs an incentive to shop.” (Hymowitz, 2012) Ms. Krill goes on to say,” I think in uncertain economic times, value becomes more important...” (Hymowitz, 2012)