Will a recession—or the prospect of a recession—curb consumer desire for green products? In the shadow of flat growth, will corporations slow their corporate social and environmental initiatives? Will we see a decrease in the burgeoning world of green marketing? The word “recession” has been splattered upon every newspaper and on the tongues of anyone with some knowledge of the lending crisis and skyrocketing price of petroleum. The question on my mind is whether an economic downturn will play a factor when consumers shop. Will green products take a backseat again?
According to the big-poppa of all securities firms, Goldman Sachs, consumer spending will continue to slow as the sickly housing markets have made it difficult for people to tap into their home equity. Another interesting thing to think about is how this will cause the unemployment rate (currently 5 %) to increase — economists predict it will increase to 6.5% by the end of 2008. Fewer jobs equals less money to be mixed in the economic batter and one more reason why consumers may opt for less expensive non-green goods.
There has already been evidence of consumers tightening up their wallets in other areas needing of discretionary income: the technology sector, which was very recently a safe haven for investors fleeing the housing markets, is fleeing the squeeze as consumers cope with the decreasing value of their homes and increasing fuel costs. In the days prior to January 1, the S&P technology index dropped 7.7 percent, making it the worst performing sector. Will consumers be just as wary to opt for premium priced green goods?
In the fourth quarter of ’07 and even into the new year we’ve seen copious amounts of data pointing to increases in consumer spending on green goods or goods from companies with a green bent:
- “Consumers expect to double their spending on green products and services in the next year” read this
- “More than half of global consumers (53 percent/representing 1.1 billion people) prefer to purchase products and services from a company with a strong environmental reputation” read this
- “Approximately 50 percent of U.S. consumers consider at least one sustainability factor in selecting consumer packaged goods items and choosing where to shop for those products…” read this
My hope is that consumers will approach these times of frugality with the idea that reducing the amount they buy, and continuing to purchase local goods and environmentally preferable goods, is, in the long, much better than reverting back to less expensive alternatives with greater environmental footprints. I’m trying to believe the optimisism and feel comfortable that the green movement and green business has hit critical mass and has crossed the bridge of relapse, but I’m still unsure. One thing to hope for is more stringent government regulation as the White House has a change of tide, but if there is a recession, will political candidates talk more about stimulating the economy and less about the environment? As long as the price of oil continues to climb, perhaps we’ll see a vast embrace of renewable energies.
I welcome your thoughts and opinions.
photo credit: dollar bills