Consumer Behavior and the Recession

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1. Summarize the key facts of the case.

In 2008 as we witnessed the catastrophe of the mortgage crisis and major corporations such as Bear Sterns and Lehman Brothers face an epic fail resulting in a tragic paradigm shift, consumers were amazed that big businesses were no longer a prosperous force on Wall Street. The fall of these companies has a significant impact on the way consumers spend. These organizations faced a level of uncertainty unlike any thing we have ever seen. In retrospect consumers acknowledge the fall of big businesses and will more than likely compare the current decline to that of the "fall of the Roman Empire" which occurred several decades ago and "The Great Market Crash" of 1929.

"The Depression reached into every area of economic life, and thus into every area of social life as well. It destroyed the great 'Bull Market' of the 1920s and sent stock prices into a long and steep decline from which they did not recover for years" (Brinkley, 2007).

The recession of today compared to the recession of old reached an all time low in which theorists and spectators suggest Americans dug themselves in a deeper hole that is almost impossible to get out of. In the midst of investment firms and the auto industry, the recession caused a trickled down effect in which the losses major corporations endured hit close to home where consumers are concerned.

2. What are the key consumer behaviors that changed as a result of the recession?

Consumers reduced their spending habits significantly. A consumer's level of spending often determines the road to economic recovery or decline. If consumers are not spending like they use to the economy will suffer and jobs will be lost. Consumer spending contributes to the economic circle of life and spins the wheel responsible for maintaining the economy. A lack of spending causes the wheel to stop or stall which hurts everyone involved. Consumers seek a smarter way to spend and save money. For example, the costs of food continue to rise. Consumers discovered that it would be better to purchase the necessary ingredients to make items instead of purchasing product that are astronomically priced. For instance, some consumers have taken an interest ...