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Predicting/Preparing for Economic Transitions 33

Direct marketing to how economic cycles
shift regional consumer spending

Economic cycles that are more severe than the average tend
to reshape the consciousness of how consumers spend rela-
tive to pre-cycle levels. Following the very sharp downturn
in consumer spending after the financial crisis in the US, US
spending went from a global high to a global low. Conversely,
US consumers’ saving rate increased significantly as a result
of the emotional and physical damage caused by the last
economic contraction. In some areas of the world, e.g.
China, Germany, and other parts of Asia, consumers in fact
were saving “too much”.

As economic contractions turn into economic recoveries,
the best telltale sign is that the economic data starts to
“bounce around” in the same place for a period of time
while the economic “noise to signal” ratio stretches to flat-
tening out. Once the recovery begins, it will be a shift in
regional saving and spending rates.

This also depends on the timing of how the economic
cycles traveled around the world region by region. For the
US consumer relative to the consumer in other global regions,
there will be a fundamental shift in saving and spending
rates. The US consumer will likely continue to be a solid
global consumer but not to the levels of consumption which
occurred prior to the last liquidity crisis. This will come from
any painful memory of US consumers tapping easy credit
(credit is the lifeblood of the economy) and then getting
burned in the process.

At the same time, as countries like China continue to
recover and expand, China’s consumers’ saving rates will
likely trend down relative to GDP while their spending
expands.