Chapter 1: America, Land of Plenty? The Times Are Changing
Even before immigrants came to Ellis Island looking for a new life filled with bountiful opportunities, the United States of America had declared itself the “land of the free, home of the brave, land of plenty,” and was residence to some extremely successful entrepreneurs. Since then, individuals and families such as the Johnson family (Johnson & Johnson), Sam Walton, Jimmy Dean (Jimmy Dean Sausages), Mary Kay Ash (Mary Kay Cosmetics), Martha Stewart, Leslie Wexner (Limited Brands), and Ralph Lauren have built their consumer product empires from the ground up. These individuals exemplified the American dream: that anyone could ...view middle of the document...
Ah, everyone is happy.
Let’s look at Figure 1.1 to see consumers’ confidence in the economy. BIGinsight surveyed 8,000 consumers nationwide. The black line represents all consumers, while the white line represents consumers who had a household income of $75,000 or more. In July 2003, 39.1% of the population sampled was confident about the economy, and 47.9% of those who earned $75,000 or more were confident. This figure improved slightly as the years progressed. But take a look at July 2008. Confidence in the economy took a nosedive. An average of only 18.8% of consumers was confident about the economy, with only 19.9% of consumers earning over $75,000 expressing confidence. Despite politicians’ statements on national television that we were “headed in the right direction,” consumers weren’t buying the stories. By July 2011, consumers expressed only a bit more confidence about the economy: 26.5% of all households and 30.7% of households earning $75,000 or more were confident or very confident regarding the economy. These statistics look better than 2008, but, of course, it also means that approximately three-fourths of the consumers surveyed had little or no confidence in the economy. No wonder Washington was in a frenzy for much of 2011.
What do you mean my neighbor was laid off?
Another component of the economy and spending patterns was employment. After 9/11, news analysts (not just news anchors but elevated news analysts) talked about the economy. Consumers heard that the country was entering a recession. As time moved along, analysts changed their wording to state that America was at the beginning phases of recession. As one year turned into another year, America was formally in a recession. By then, news analysts and consumers alike talked about the country and how it was suffering another Great Depression.
Employment layoffs across the country were daily topics of conversation. It didn’t matter if the company was large or small, from a rural community or a big city, employment downsizing made the front page. What was once considered a large employment sector was now viewed as small. Southern states experienced double-digit unemployment figures. Consumers regularly compared notes on family and friends in other states. Conversation revolved around questions regarding who had a job, who was laid off, who was about to be laid off. Meanwhile, there was speculation that the reported unemployment figures were low because many people had stopped getting unemployment checks or simply had given up.
Look at Figure 1.2. In July 2002, 7.8% of all households worried about layoffs. Concerns about job losses were not confined to consumers in lower income brackets. Of the households earning $75,000 or more, 12.2% worried about keeping their jobs. As consumers saw their neighbors get laid off, concerns increased. By July 2006, there was some breathing room. Businesses were doing a bit better and concerns regarding job security were a bit...