Wednesday, July 15, 2009

The New Normal and Sustainability

Americans are adjusting to the new economic reality of higher unemployment and lower incomes and this is helping to drive sustainability.

In a recent article entitled "Americans Adapt to the New Normal" Alice Gomstyn reports that Americans are doing far more than simply reducing unecessary expenditures. Americans are making due with what they have, bargain hunting, using less energy and being more efficient. Americans are also paying off credit card purchases so they don't carry balances or accrue interest charges.

People and businesses accross the socio-economic spectrum are trying to find ways to adapt to the new economic reality. Many in the small business community are restructuring their bank commitments and some have adopted extreme measures like not taking a paycheck and selling their products at a loss.

According to a recent Time Magazine article, 27 percent of Americans are using their retirement or college savings to pay the bills, 34 percent of Americans earning less than $50,000 a year have not gone to the doctor because of the cost, 31 percent have been out of work at some point, and 13 percent have been hungry.

There is also evidence that this recession is impacting more affluent buying behaviors, 4 in 10 Americans earning more than $100,000 a year say they are buying more discount brands, 36 percent are using more coupons, and 39 percent have postponed or canceled a vacation to save money.

In one way or another this recession is affecting everyone, 40 percent of people at all income levels say they feel anxious, 32 percent have trouble sleeping, and 20 percent are depressed.

The change in consumer behaviour is not limited to this recession, 61 percent claim that even after the economy recovers they will continue to spend less than they did before. Americans are changing their priorities and their spending patterns.

Rob Watson, Executive Editor at GreenerBuildings.com suggests the "New Normal is actually saving for a rainy day and living within our means. New Normal is people get paid for actually producing something rather than using financial sleight of hand that mostly involves the complicated repackaging of overvalued or over-leveraged assets."

According to Watson, the New Normal is nothing short of "a re-definition of wealth that emphasizes satisfaction of simple basic desires over the accumulation of cheap stuff...an economy and a built environment that operates off of the flows of the planet, rather than its accumulated stocks. New Normal is when tapping into those flows is inherently less expensive than chewing our way through dwindling stocks." and he concludes "If this newfound prudence sticks, it will be a great thing for this country."

Motivated by the need to save money, people are becoming more efficient in their usage of everything from laundry detergent to fuel. Consumers are more careful about their purchases and less willing to buy what can be had for free. In the US bottled-water sales have dropped 10 percent and the Los Angeles public library system has recently set record highs in circulation and visitors. America is changing and as the old consumer values give way to more efficient ones, we are experiencing a paradigm shift as the new culture is emerging.

"A consumer culture invites us to want more than we can ever have; a culture of thrift invites us to be grateful for whatever we can get... this season will be remembered for what we lost, or all that we found."

This historic economic downturn has helped to auger a paradigm shift and create the necessary conditions for the emergence of a new culture. Only a crisis of the magnitude of this recession could have produced the kinds of changes we are seeing today.

America is becoming more frugal and reducing costs through greater efficiency. As a result a more sustainable culture is taking the place of the traditional model based on consumption.


Next: The New Normal and Implications for Business

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1 comment:

Lia said...

Thanks for your comment on my blog. Personally, I have found consumerism to be an addiction or merry-go-round that you have to first step away from to get perspective and realize how really strange and self-perpetuating it is. Like Paco Underhill noted, "stuff" doesn't ultimately change who we are, or even make us happier in any lasting ways. I think the new sustainability is about picking your priorities.