5 Years After Financial Crisis: Meet the New Consumer


The 2008 financial collapse forever changed the landscape of the financial industry, but it also altered consumers’ financial habits.

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As a result of the Great Recession that followed the financial crisis, the average American household will have lost between $50,000 and $120,000 in earnings potential, according to the Federal Reserve Bank of Dallas. Nationwide, the estimated cost is between $6 trillion and $14 trillion.

The financial crisis has bred a more cautious population of consumers, says personal finance planner and economist John O’Meara.

“People have lowered their expectations of how things will go and expect to work more now than they did before,” O’Meara says. “This can be explained by what happened in the stock market. People have lower expectations that they will be wealthy in the future.”

With that said, as the more signs continue to point to a recovery, Credit.com expert Gerri Detweiler says consumer optimism is beginning to creep back up.

“We see more people willing to spend, and it’s a combination of cautious optimism and pent up demand. They are tired of putting off what they needed for so long,” Detweiler says. “And for those that weren’t significantly impacted by the recession, they are certainly looking forward rather than backward.”

Purse Strings Beginning to Loosen

It may have taken five years, but more consumers are willing to spend and use credit again, says Detweiler. Total debt balances in the second quarter of 2013 were $2.77 trillion for non-housing and $8.38 trillion for housing debt, according to the Federal Reserve Bank of New York. This compares to $2.65 trillion in non-housing debt in second quarter of 2008, and $9.95 trillion in housing debt.

“They are more willing to take risks and are finding that lenders are more willing to help in ways that they were not four years ago,” she says.

While consumers feel more confident about spending, they remain cautious on purchases that mean taking on debt, says  O’Meara.

Data from the Federal Reserve data also show consumers are paying their bills on time, as the overall 90-day plus delinquency rate on credit cards has fallen to 5.7%, the lowest since mid 2008.

“I think people are less willing to do it if they need to leverage or borrow,” he says. “They saw what happened in 2007 when there was a ton of leverage, and how that has changed.”


In what may seem to be a counter-intuitive move, personal savings levels as a percentage of disposable income have actually fallen since the recession, according to personal finance data site NerdWallet. In 2005, personal savings stood at 1.5%, the site reports, then climbed to a high of 5.4% in 2008, but retreated to 4.7% in the fourth quarter of 2012.

“Mostly, it’s because they aren’t taking on new debt,” O’Meara says. “And less of their money is going toward debt payments.”

Shoppers are also looking to save more today, post-recession, says Michael Vivio, president of Cox Target Media Group, provider of Valpak. It’s less about bragging about wealth or expensive items as frugality has become more chic.

“As the recession dragged on longer and longer, things like bragging about consumption aren’t happening anymore,” Vivio says. “People want their dollar to go as far as possible. It’s possible to do that now without as much stigma.”

Being prudent with finances also no longer has a negative connotation, says Loren Bendele, president, Savings.com.

“It’s not your grandmother clipping coupons—it’s possible for this generation to do so without being seen as cheap,” Bendele says.

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