The “Recession Diet”: Are You Spending Less?
May 13, 2008 by Miranda Marquit
Filed under Finance
One of the trends in personal finances that is coming to light right now is the “recession diet.” This is a term that describes consumer behavior in times of economic turmoil. Whether or not we are in a recession is beside the point. Consumers are worried about their personal finances, and that affects their decisions. Calculated Risk describes the “recession diet”:
In economics, “inferior goods” doesn’t refer to the quality of the goods, instead it refers to goods where demand changes inversely with income. As incomes rise, people buy less of the inferior good. But as incomes fall, they buy more.
This means that instead of ordering out, more people are likely to make their own meals. Food prices inflation is also contributing to the “recession diet” and that means that not only are more meals are being made from scratch, but also that generic brands are becoming more popular on the shelves as well. Big bag of Malt-O-Meal cereal, anyone?
Stores are starting to see a difference as well. Wal-Mart is reporting great quarter one profits. Why? Because, thanks to the “recession diet,” more people are shopping at Wal-Mart to save money.
Have your spending habits changed? Are you on a “recession diet”?
image credit: sxc.hu
Not on a recession diet YET, but I have to say, that meals made from scratch and more savings, may be the best thing that happened to Americans in a looong time.
I agree that one good thing that might come out of all of this is that many Americans may start looking at their spending habits and making changes.
We used to just hop in the car and not think about whether we really needed to run that errand. Now, we are planning our shopping so we minimize miles. Reminds me of the old saying in WW II: “Is this trip really necessary?”
Thanks for stopping by, Jean. We’ve been doing the trip consolidation thing a lot more as well. And the mile walk to the bus stop isn’t looking so bad — now that it’s nicer out.