The most obvious reaction of the average buyer to an economic down turn is to become more sensitive to her choices. But is it always easy? Is it such a simple activity? In this article, we want to discuss the buyer behaviour as it relates to a twisted economic fortune.
The first consideration is what constitutes an economic downturn. Who does not know that a down turn is when a country's economy can not meet up with present and future needs at the current levels without an extra ordinary measure such as borrowing, austerity measures or wage cuts? Beside this macro perspective, there is another perspective which looks at downturn from the prism of the individual buyer, the consumer whose economic health is the best index of how well the macro economy is doing.
The individual's reaction to a loss of job varies. The worker with limited other options gets the rudest shock following a letter of termination. Those with prospects of gaining employment in other sectors may feel either relief or slight discomfort. The spectrum of reactions ranges from seeing it as a bomb shell to a huge joke. No matter the individual's personal reaction, a downturn leads to whole lot of disruption in social and skill bases. What happens with and to those skills could mean speedy recovery from a downturn both for country and individuals. It is these same employees or employers who struggle to survive that end up ricocheting a swirl or reactions that become the national GDP. So how do these buyers, employees and employers react to a sudden slump in buying power?
One every thinks economic problems are cause by some one else. Hence the blame game. Some blame tangible some blame intangible forces for their problems. If the severance of the source of livelihood was foreseen, some are relieved that the end had finally come. Usually, they would have been thinking of alternatives. For this group, adjusting is a little easier.
Another group will seek scape goats elsewhere rather concentrate on finding a solution. Cyril, not real name, took umbrage at the american government for not coming to the aid of construction workers like himself as they came to the aid of the banks. Others would invest their resources in other areas or environments including taking their skills abroad. Each of these entails consequences for the local economy and for the individuals involved.
Depending on the individual's psychological make up, the behaviour that follows a sudden loss of economic power can be dramatic/ tragic. Others may be less dramatic but significant all the same. After all it is ability to fend for oneself and family that we are talking about. .
Dramatic Reactions: Adolf Merckle was a German billionaire. He was the 94th richest man in the Forbes Rich list in 2008 with an estimated value of $9.2billion. When economy went tail-spinning, the 74 year old took his own life. according to family sources, “The distress to his firms caused by the financial crisis and the related uncertainties of recent weeks, along with the helplessness of no longer being handle the situation, broke the passionate family businessman, and he ended his life”.
In 2010, over 31,000 Japanese were reported to have taken their lives. Many of them for reasons not unconnected to prolonged job losses.
Strategic Reactions: Those left in employment find themselves working extra hard and may end up with health issues. They also tend to become more cost conscious initially, for fear of they also lossing their jobs. How long this immediate reaction lasts is uncertain though. But resistance to price, cost cutting and leisure aversion are popular reactions.
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