By: Debbie Howard
During trying times, it’s important to periodically stop, take a deep breath and reassess where things stand.
Many analysts mark the “anniversary” of the global financial meltdown with the collapse of Lehman in September 2008, which resulted in a domino effect, felt the world round. Ever since, the entire world has been readjusting itself and its ideas of how things work, both on a personal and business level.
One interesting impact comes from the world of academia, where MBA and business schools are incorporating lessons from the crisis into their programs, adding classes on the meltdown, its roots and consequences. Professors are encouraging students to question their assumptions about financial models, to probe for better information about complex products and to better understand the roles of regulatory agencies and governments.
At the same time, the shock of what happened has become the new status quo, and consumer statistics are beginning to show that stress levels — while still high — are at least lower than they were 6 months and 1 year ago.
For example, several U.S.-based surveys have shown that American consumers — who were at the epicenter of the financial meltdown — are already beginning to report lower stress levels. Although these percentages still remain quite high and show that many Americans are still suffering significantly from economic stress, they also indicate that people are beginning to adjust to a new reality.
Here in Japan, it is also interesting to consider the effects on the consumer. In a market where “risk assets” (i.e., stocks, mutual funds and investment trusts — particularly foreign products) were just beginning to gain a foothold as a growing percentage of household assets, the meltdown might well have meant a complete reversal of Japanese consumer investor appetite. Indeed, there have been some shifts — i.e., from foreign-denominated to yen-denominated investments, from higher- to lower-risk products, and from risk to non-risk assets.
But at this point, it appears that the bursting of the bubble in the early 90s caused much more of an emotional shock among consumers, even though it had a lower impact on their pocketbooks. At that time, many consumers were so frightened that they exchanged nearly all of their risk assets in favor of non-risk savings products.
Then again, Japanese consumers went through a huge and everlasting emotional adjustment during the 13-some-odd years of economic stagnation throughout the 90s and the early 2000’s. Throughout this period, Japanese consumers were forced to adapt to a new reality, having faced a number of dramatic “psyche changing” events such as the end of lifetime employment and the uncertainty related to company and government pensions. In the years since, many have had to find new ways to make a living, including part-time jobs and entrepreneurial activity.
Today, at least some Japanese consumers seem to have become less risk-averse as regards their investments, presumably as a natural aspect of their having become more familiar with such products. This time, many are not allowing the past year’s events to scare them away from some sort of investing. This more adventurous behavior translates to other product and service categories as well, ranging from fashion brands to retail channels to travel destinations and beyond.
Debbie Howard is Chairman of CarterJMRN and President Emeritus of the American Chamber of Commerce in Japan.
Originally Published in Nikkei Weekly, 2nd November 2009
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