Determinants of Consumer Spending Behavior During Economic Recessions

Feng Tai ()

American Journal of Economics, 2024, vol. 8, issue 1, 13 - 25

Abstract: Purpose: The aim of the study was to assess the determinants of consumer spending behavior during economic recessions. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: During economic recessions, consumer spending behavior is influenced by income levels, consumer confidence, savings and debt levels, perceptions of job security, unemployment rates, and government interventions like stimulus packages. Lower-income households tend to cut back more significantly, while uncertainty and job insecurity lead to cautious spending habits. Those with savings may maintain spending, while high debt levels can prompt restraint. Rising unemployment prompts prioritization of essential purchases. Government interventions can mitigate spending declines by bolstering income and confidence. Implications to Theory, Practice and Policy: Keynesian theory, behavioral economics theory and permanent income hypothesis may be use to anchor future studies on assessing the determinants of consumer spending behavior during economic recessions. Businesses should adapt their strategies to align with consumer preferences and priorities during recessions. Policymakers play a critical role in mitigating the adverse effects of recessions on consumer spending behavior.

Keywords: Consumer; Spending Behavior Economic; Recessions (search for similar items in EconPapers)
Date: 2024
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