We hear about the global recession on a daily basis, but for a large majority, the economic crisis only goes as far as their own job security. As long as the paycheck keeps coming in, it's nearly business as usual.
Each recession is unique in is own way. One of the interesting factors during this down-trend is the mood of the general populace. Unemployment rates are sky-high. We've developed a post-industrial service-based global economy, where big player nations send most of the production work outside of national borders.
In fact, there are several reasons for low and mid-income range families in these countries to be in a panic, but many continue spending the same as they always have. Unless directly impacted by the loss of a job, nothing is slowing down the outflow of income for the average family.
Obvious expenditures may have diminished, such as going out to movies or eating out, but money is still exchanging hands. Savings accounts aren't being bolstered; people aren't hording like in recessions past. Why is that? There are several factors why people don't seem to be as bothered by this recession, unless directly impacted.
The first reason is a growing sense of entitlement. The average person no longer works to save money for big purchases. Lives are lived on credit and often one debt is traded for another. If this weren't the case, we'd be hearing less commercials advertising, "Don't you deserve it?" When the average consumer is led into a capitalist market with the misplaced understanding that credit can be treated like cash, and that debt can be accumulated according to how much one can afford as a monthly payment, we enter a semi-realistic state of general economic affairs.
This recession was caused primarily by the activities of major financial institutions and lending practices, but was that behavior just an extension of a much larger problem? Will the next recession ride at the heels of a complete credit upheaval?
Another reason people aren't cramming as much money as they can into their savings accounts is due to the general distrust of financial entities. Large banks and investment companies in the United States just received a massive bailout with taxpayer dollars. If anything, this only emboldens the concept of living on credit and filing for bankruptcy or crying for consumer help if things go south.
Of course, all of this sounds dreadful and very negative. It sheds a bad light on the current state of affairs for consumers in developed markets. But recessions are a way for those markets to point out the error of our ways, they are warning signs that business as usual as it was allowed in periods of strong growth can no longer be relied upon.
If growth is established upon a weak foundation, such as offering loans to consumers who wouldn't normally qualify or consumers living on credit without balancing sound financial principles, the market will eventually face a correction - a painful path back to a point where old foundations are removed, lessons learned, and a new foundation can be built.
A prime example of this was the Dot Com bust in 1999 after a period of insane financial growth and wanton speculative investing.
So, how has this global recession affected people? Companies have been forced to lay off workers. Families and individuals with high credit card debt and the loss of a job are more likely to receive help from government programs, thus increasing national debt and likely taxes for the rest of us for years to come. Personal spending, for a large part, has not been corrected.
While some have learned the lessons this recession has taught us, many continue on - pointing their fingers at the financial organizations that got us into this mess, while ignoring the fact that it was also the consumers who should have known better than to take interest-only loans or loans with balloon payments.
The good news is that there is still time for the average consumer to learn the values and principles of older generations: to work for what you have and to acquire only the things you will use, to save for a rainy day, and to make the most out of what you have invested in.