Some Americans are still suffering the aftermath of the Great Recession.
People who have experienced long periods of unemployment are more likely to be scarred and tend to spend less money and choose lower-quality items than those who did not experience such hardship, according to a report circulated this week by the National Bureau of Economic Research, a nonprofit economic research group with offices in New York City and Cambridge, Mass.
University of California, Berkeley researchers found people who had been unemployed for long periods of time or suffered from economic shocks also more likely to use coupons and to purchase sale items. Researchers looked at data from various longitudinal household survey, including the University of Michigan’s Panel Study of Income Dynamics, Nielsen Homescan Panel and the Consumer Expenditure Survey.
The impact of these economic shocks are stronger for younger consumers than older ones and help predict beliefs and behaviors for that generation, the researchers found. When the researchers looked at the Great Recession specifically, they found the younger people were more sensitive and their spending was more negatively affected as a result.
The good news: Consumer goods spending rose sharply in April for a second straight month, which is one indicator that people are feeling more confident about the U.S. economy. Americans are buying more clothes, and are shopping at home-furnishing stores, internet retailers, garden centers and even department stores.
Shopping isn’t the only way people show their scars from the financial crisis. Some millennials, the generation in their mid-20s and early 30s, consider stocks to be too risky and tend to shy away from investing, previous research has shown. They saw what the collapse of the stock market did to their families’ and friends’ life savings.
Instead, this generation chooses to save their money. Almost three-quarters are saving for retirement and 39% are considered “super savers,” according to a Transamerica Center for Retirement study, meaning they save more than 10% of their income. The 42% that do invest do so conservatively, and a quarter hold their investments in cash as opposed to stocks and bonds.