Lessons from recessions: the effect of economic uncertainty on today’s consumer

As we near the close of 2022, it’s certainly a tough time for the global economy. Some parts of the world are already in recession, such as the UK1, and others look likely to go into recession in 2023 (e.g., Germany)2. Other parts of the world also seem likely to experience a relative economic slowdown3. So how is this macro-economic context likely to affect the minds of shoppers and consumers?

In this blog, I’ll highlight five lesser-known affects that an economic slowdown or recession may have on shoppers and consumers:

1. Recession Reactions

Is the macroeconomy suggestible?4

In a global study, it was found when a recession is announced by media it leads to a decrease in consumer confidence, which then leads to less consumer spend. In turn, this may lead to a decrease in consumption growth by as much as 1% within the quarter that a recession is announced.

This implies that the macro economy is suggestible and that a negative (or positive) message may have economic outcomes which are independent of the actual fundamentals4.

2. Purchase happiness

When financially constrained, is a purchase savoured with relish or is it met with negative exertion?

 In research including a meta-analysis of 42 studies, it was found that perceived financial constraint decreased purchase happiness, regardless of whether the purchase was for material or experiential good. This is because with economic uncertainty, we often see a greater degree of evaluating opportunity costs for a purchase. This effect is accentuated for planned purchases and also lead to more negative reviews5. While this research is more related to one-off purchases, there are likely to be some parallels with grocery shoppers.

3. Health vs. wealth

When in recession, could there be an increase in nutritional health?

During the great recession, there was evidence that US and UK consumers reduced spend in restaurants and instead opted for at home cooking6,7. This then led to an increase in nutritional health, due to more cooking from scratch at home. For US consumers, grocery purchases increased in nutritional health by around 4-8%8.

There remains a note of caution when applying these findings, specifically to lower socio-economic groups and low-middle income countries.

4. Price knowledge

To what extent do consumers accurately remember prices from the grocery shop shelf?

Customers’ memory for prices are known to be poor in general, and their ability to recall exact prices varies from 2% to 61% 9. Whilst there are multiple reasons which may in part explain this variance, such as the design of the research, a meta-analysis of 297 mainly US studies suggests that macro-economic variables also play a role. For example, higher inflation led to more price recall error, but less economic growth led to better price recall.

It is difficult to know what the overall effect is if a market is experiencing stagflation.

5. Cultural shifts

Does culture change during a recession?

Western nations tend to be more individualistic, with a focus on ‘I’ as opposed to ‘we’. However, evidence from the US suggests when an individualistic economy faulters this culture weakens to some extent. For example, adults may have less need to distinguish themselves from others10.

If there is less desire to stand out from the crowd, does this imply there is a greater role for social norms (e.g., buying the best-selling product) which could also be used for improving on areas like health and sustainability? Does this mean when marketing products, there is less of a need to market a product’s uniqueness?


As the world looks on to 2023 with concern, it is difficult to predict if the global economy will continue to experience a slowdown or if it will evolve into a full global recession. If there is a global recession, it will likely be different from the recent past, with stagflation and higher energy prices. Therefore, it is difficult to state if the observations above will necessarily apply.

What can be stated with certainty, however, is that the macro-economic picture will impact the minds of the shopper and consumer, which will in turn affect behaviours at the store and at home. Retailers and CPGs would do well to understand such nuances in an evolving economic climate.


1 BBC (Nov 2022)
2 House of Commons library (Dec 2022)
3 OECD (Sept, 2022)
4 Eggers, A.C.; Ellison, M. and Lee, S.S (2021). The economic impact of recession announcements. Journal of Monetary Economics 120: 40–52
5 Dias, R. S., Sharma, E., & Fitzsimons, G. J. (2022). Spending and happiness: The role of perceived financial constraints. Journal of Consumer Research. 49 (3): 373–388.
6 Chen, A.Y.and Sturm, R (2022). Diet Quality in the United States Improved during the Great Recession and Deteriorated During Economic Recovery. Journal of the Academy of Nutrition and Dietetics 122 (5): 974–980.
7 Monsivais, P. (2022). Healthy Eating in Hard Times? Journal of the Academy of Nutrition and Dietetics 122 (5):909-912.
8 Kuhns, A. & Volpe, R. (2014). Assessing the Impact of the Great Recession on Healthfulness of Food Purchase Choices. Annual Meeting, July 27-29, Minneapolis. Agricultural & Applied Economics Association’s
9 Jensen, B.B. & Grunert, K.G., 2014. Price knowledge during grocery shopping: what we learn and what we forget. Journal of Retailing 90 (3), 332–346.
10 Bianchi, E. C. (2016). American individualism rises and falls with the economy: Cross-temporal evidence that individualism declines when the economy falters. Journal of Personality and Social Psychology 111: 567–584.

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