Current Consumer Sentiments
The Path to Pessimism
At the beginning of 2008 when the housing market started to crash and an increasing number of foreclosures were occurring, it became apparent to consumers that economic troubles were on the horizon. According to the January 2008 Country Report, GDP was forecasted to slow to 1.5% in 2008 but expected to recover to 2.6% in 2009 when “the worst of the housing downturn” had passed. This forecast was proven wrong, however, as in December 2008 a recession had been officially announced and in March 2009 the financial crisis and housing woes were still very much so in the headlines. As a result, the revised GDP forecast was a contraction of 3.1% in 2009. These events have influenced aspects of consumer’s lives, such as spending, saving, and unemployment. The devastating effects on these areas have put Americans into a negative social mood, further affecting the downturn in current consumer sentiment.
Consumer Spending and Saving
Reports compiled by the University of Michigan state that “there are several important factors blocking an increased pace of spending: uncertainty about future jobs and incomes as well as a desire to increase savings and decrease debt.” In fact, March 2009’s Country Report claims that, “the fearful mood among consumers is reflected in rising savings rates.” As of January 2009, the savings rate was 5.1% compared to only 0.3% during a similar period in 2008. Even so, the average amount of savings Americans have are much lower than what they were in previous decades and therefore, “over the past several years, consumers have begun to learn the advantages of postponing purchases in anticipation of lower prices.”
Unemployment
In September 2008, the unemployment rate was at 6.1% and has rapidly increased to 10.2% as of October 2009. Moreover, lay-offs, particularly in manufacturing, construction, and other service industries, have depressed consumer confidence which dropped 8.4 points to 50.9 on the RBC Jobs Index in November 2009 alone. It’s more than likely that the US will experience the “discouraged worker effect”, a consequence that occurs immediately after the recession in which discouraged Americans simply give up looking for work until the outlook is undoubtedly positive, as they did in the 1990s.
Consumer Confidence
Reported by The Conference Board, the consumer confidence index currently stands at 47.7, down from 53.4 in September and 100 in 1985. Despite gains seen during late spring 2009, sentiment was turbulent throughout the summer and fall. According to a RBC CASH Index press release in early November 2009, “higher gas prices, slumping retail sales, volatile stock markets and continuing joblessness resulted in the sharpest one-month drop in consumer sentiment since last autumn’s financial crisis.”
The Stakes are Higher
Although we are heading in the right direction to get out of the recession, consumers are still hesitant on how to spend their money. Ira Jersey, head of U.S. Interest Rate Strategy for RBC Capital Markets reports, “although we have pulled back from the abyss, consumer attitudes remain susceptible to negative news.” The ongoing hesitance partially stems from the belief that this recession has been tougher on Americans compared to other recessionary periods, like those that occurred in the early 1980s and early 1990s. The unemployed population is more vulnerable today than they were a generation ago for several reasons, including the decline in size and influence of unions, higher amounts of debt, and fewer traditional pensions to fall back on. For example, an MSNBC article titled Jobless (November 8, 2009) noted that during the recession of the early 80s, “the United Auto Workers persuaded the Big Three auto companies to pay up to 95 percent of the gap between laid-off worker’s unemployment benefits and what he or she made on the job.” Actions like these are no longer commonplace.
At the beginning of 2008 when the housing market started to crash and an increasing number of foreclosures were occurring, it became apparent to consumers that economic troubles were on the horizon. According to the January 2008 Country Report, GDP was forecasted to slow to 1.5% in 2008 but expected to recover to 2.6% in 2009 when “the worst of the housing downturn” had passed. This forecast was proven wrong, however, as in December 2008 a recession had been officially announced and in March 2009 the financial crisis and housing woes were still very much so in the headlines. As a result, the revised GDP forecast was a contraction of 3.1% in 2009. These events have influenced aspects of consumer’s lives, such as spending, saving, and unemployment. The devastating effects on these areas have put Americans into a negative social mood, further affecting the downturn in current consumer sentiment.
Consumer Spending and Saving
Reports compiled by the University of Michigan state that “there are several important factors blocking an increased pace of spending: uncertainty about future jobs and incomes as well as a desire to increase savings and decrease debt.” In fact, March 2009’s Country Report claims that, “the fearful mood among consumers is reflected in rising savings rates.” As of January 2009, the savings rate was 5.1% compared to only 0.3% during a similar period in 2008. Even so, the average amount of savings Americans have are much lower than what they were in previous decades and therefore, “over the past several years, consumers have begun to learn the advantages of postponing purchases in anticipation of lower prices.”
Unemployment
In September 2008, the unemployment rate was at 6.1% and has rapidly increased to 10.2% as of October 2009. Moreover, lay-offs, particularly in manufacturing, construction, and other service industries, have depressed consumer confidence which dropped 8.4 points to 50.9 on the RBC Jobs Index in November 2009 alone. It’s more than likely that the US will experience the “discouraged worker effect”, a consequence that occurs immediately after the recession in which discouraged Americans simply give up looking for work until the outlook is undoubtedly positive, as they did in the 1990s.
Consumer Confidence
Reported by The Conference Board, the consumer confidence index currently stands at 47.7, down from 53.4 in September and 100 in 1985. Despite gains seen during late spring 2009, sentiment was turbulent throughout the summer and fall. According to a RBC CASH Index press release in early November 2009, “higher gas prices, slumping retail sales, volatile stock markets and continuing joblessness resulted in the sharpest one-month drop in consumer sentiment since last autumn’s financial crisis.”
The Stakes are Higher
Although we are heading in the right direction to get out of the recession, consumers are still hesitant on how to spend their money. Ira Jersey, head of U.S. Interest Rate Strategy for RBC Capital Markets reports, “although we have pulled back from the abyss, consumer attitudes remain susceptible to negative news.” The ongoing hesitance partially stems from the belief that this recession has been tougher on Americans compared to other recessionary periods, like those that occurred in the early 1980s and early 1990s. The unemployed population is more vulnerable today than they were a generation ago for several reasons, including the decline in size and influence of unions, higher amounts of debt, and fewer traditional pensions to fall back on. For example, an MSNBC article titled Jobless (November 8, 2009) noted that during the recession of the early 80s, “the United Auto Workers persuaded the Big Three auto companies to pay up to 95 percent of the gap between laid-off worker’s unemployment benefits and what he or she made on the job.” Actions like these are no longer commonplace.
Color Trends: 1990 - 1998
AN OVERVIEW OF COLOR
Observations of color in the 1990s led to the discovery of many patterns relating to the context of the time. One of the major factors that appears to have influenced color is the recession that occurred in 1990 and 1991. For apparel and accessories, color started out bright but then as the recession continued more muted colors took their place. Bright colors phased in and out throughout the rest of the 1990s, switching between concentration on apparel and accessories. Home interiors saw a more consistent pattern of colors, starting out rather muted during the early 1990s but then transitioning into brighter colors as the decade progressed. During the 1990s, it seemed that there was more color correlation between apparel and accessories than between apparel or accessories and home interiors.
Color in Apparel
by Danielle Hickman
Overall, apparel color trends in the 1990s appeared to directly mimic the economic trends of the time period. For example, the years 1990 – 1992 lacked overall color (with the exception of spring/summer 1990) seen in 1996 – 1998, something that could be a result of the recession. Executive director of the Pantone Color Institute explains that “the state of the economy might have the largest impact on the colors consumers favor. When the market tanks, people often retreat to neutrals. But lately, instead of ignoring color -- think back to the grunge trend during the downturn of the early 1990s -- people tend to be cautious with big-ticket items but add color through less expensive purchases.” This seemed to be a growing trend throughout the ‘90s, as I saw many spreads urging consumers to add color without breaking the bank, or buy versatile clothing in basic colors.
Color in Accessories
by Lindsey Crane
While researching the color of accessories, it seems that the trends coincided directly with the social mood. When consumer confidence was low, due to just coming out of a recession, there were minimal accessories being worn and any accessories that were being worn, there was a lack of color. When shoes were bright in color, cosmetics and jewelry were neutral, and when cosmetics and jewelry were bright, shoes were kept simple. Main questions that arose while doing the research was if the minimal accessories had to do with bright color use in apparel and vice versa. What caused color to back a comeback in 1998?
Color in Home Interiors
by Danelle Howell
After researching and collecting colors that were popular for home interiors in the 1990s, it is apparent that colors correlated rather closely to the social mood of America. Early in the 1990s, most of the colors were pastel or muted, with the exception of a few bright colors during the spring and summer seasons, which matches the somber mood that people were in during the recession of 1990 to 1991. As the US started to recover from the recession, colors started to become brighter and bolder, especially during the summer months. This is particularly demonstrated in 1992 when people who were only just beginning to recover from hard economic times felt that their home was one of the only places where they had control. Although common for the brighter, bolder colors to be associated with the spring/summer season, these colors also started appearing in the fall/winter season as the 1990s progressed into a more positive social mood. Although nearly every season was graced with one or more important neutral colors, these colors were often used to help the bolder colors pop.
Sources: ‘90s Fashion Trends, 1990’s Fashion Trends, 1990s Fashion Statements for Men, Colour research and trend forecasts from Pantone Color Institute , Harper’s Bazaar, House Beautiful, The 1990s Fashion History Part 2, Vogue.
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