Many companies can anticipate the performance of their sectors in a recession. McKinsey research shows that during the 1990 – ‘91 and 2001 – ‘02 downturns, for example, U.S. consumers reprioritized their spending rather than cutting it across the board. Consumer spending dropped in discretionary categories like dining out, personal care products and charitable donations. But expenditures for groceries, reading materials, and other options that substitute for more expensive ones actually rose. So did outlays on insurance, health care, and, above all, education.
Average growth in U.S. consumer expenditures (1990-91 and 2001-02) compared with average growth for entire period (1984-2008); index: average growth for entire period = 0
Increased spending over period average
Education (eg. tuition, textbooks)....................90
Reading (eg. newspapers, magazines) ..............53
Personal insurance, pensions ..........................43
Health care (eg. health insurance, services)........29
Food at home 28
Decreased spending over period average
Entertainment (eg. tickets for events, trips).............-06
Housing............................................................-10
Tobacco products..............................................-13
Cash contributions.............................................-28
Apparel & service...............................................-45
Transportation...................................................-70
Personal-care products & services.........................-78
Food away from home ......................................-110
Source: The McKinsey Quarterly (https://www.mckinseyquarterly.com)
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