As human beings we have basic wants and needs that carry through time. Maslow's Hierarchy of Needs (left) explains that the root of all human action is to fulfill these needs, starting at the bottom with the physiological needs, and progressing up the triangle one by one until self-actualization is reached. Filling these needs is the process of consumption.
Human behavior is a key factor in the subject of marketing. Understanding consumers on a psychological level gives marketers the ability to persuade us to buy, even when the purchase won't actually fill a need. They do this by making us feel like we need their product, for at least one of the reasons in Maslow's Hierarchy of Needs. This, in turn, creates consumerism, a culture defined by the obtaining of things.
Successful businesses will often market towards the more basic needs when the economy is bad and people are struggling, and the higher needs when people are doing well, are more relaxed, and hopefully have more money left after their bills are paid. This disposable income is what drives a healthy economy, extra money that can get cycled back through businesses and ideally into the employee's hands. As a result, more disposable income is usually a good indicator of a robust economy. However, there is a difference between disposable income and borrowed money (debt), and endless consumer credit makes it hard to understand the true and present state of the market.
Looking at the "booming middle class" of the 1950s for example, better wages and job security led to a huge marketing push and tons of new household gadgets designed to make life easier. Air conditioners, power lawn mowers, vacuum cleaners, dishwashers, televisions, plastics, frozen foods, garbage disposals, washing machines, dryers, and more flooded the market and suddenly became the things that proved a family's middle-class status. In this "keeping up with the Jones's" mentality, the "buy now, pay later" idea became popularized, and as a result perpetual debt slowly became the norm. Now over 60 years later, here we are, with the average household debt somewhere close to $90,000, which includes massive mortgages, credit cards, car loans, and student loans.
But there are institutions that always do well, regardless of the economic climate. Successful businesses will adapt their strategies based on the economy, and as a result some companies actually grow in times of decline.
Our lives are like businesses; we have sources of income, expenses to pay, and choices to make to determine the best use of our resources. Our success is determined in part by the market conditions, but mostly by how well we manage these things. Looking at all of our expenses in this context, for most, housing would be the biggest and most burdensome expense. If we can find a way to reduce the cost of housing, it would be possible to thrive, regardless of whether the economy is growing or stagnating.
We do not have to be at the mercy of the ever-changing market. We have the power to create financial comfort and stability, and the key is in what we call home.
http://www.huffingtonpost.com/amitai-etzioni/the-crisis-of-american-co_b_1855390.html
http://www.fool.com/retirement/general/2016/05/08/the-average-american-household-owes-90336-how-do-y.aspx
