Newswise — The economy may be showing signs of improvement but consumers will adopt thriftier habits for the long haul according to Michael McCall, Ithaca College consumer psychologist.
"Several months ago, we were in shock; nobody believed what was happening. So it was a stress-like reaction. Now people are spending less. People are tightening their belts and it is not clear exactly when they will stop tightening and start spending again," said McCall, who compares it to the way consumers reacted to rising gasoline prices.
"For years it seemed that no matter what price gasoline reached, people would still travel. Even when gasoline reached $3.00 per gallon in the United States, individual driving behavior changed very little. But that pricing honeymoon would not last forever. When gasoline hit $4.00 per gallon during the summer of 2008, that was the price point that changed peoples' behavior. People stopped driving as much and started consolidating trips. Now, even though the gas prices have gone down, much of the behavior has not reached that pre-$4.00 a gallon level. We expect the same thing might be going on with other types of consumer spending. People are settling in to maybe five or ten years before we expand back to where we once were," he said.
"Some industries will be hit a lot harder than others. Basic necessities will be O.K.; the hospitality industry may be challenged and clearly the auto industry is challenged. People are willing to keep their existing cars and push them a little farther than they did a few years ago.
"Those industries that emerge from these difficult times will probably consolidate. For instance restaurants and department stores may merge and will likely emerge from this crisis in a very different form."
A social psychologist by training and a nationally recognized consumer behavior expert, McCall's expertise in consumer psychology has made him a frequent presenter at national and international venues. McCall has published over 40 academic articles on topics that include customer loyalty, rebate usage and decisional models in consumer contexts including restaurant tipping, underage drinking (for which he received an NIH grant), credit cards and debt repayment. His research has appeared in academic journals such as the "Journal of Applied Psychology," "Cornell Hospitality Quarterly," and the "Journal of Socio-Economics" among others. His work has also been cited in numerous popular press outlets including USA Today, the Washington Post, Los Angeles Times and CNBC.
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