Mindless consumption is overly stressful.
All is not well with the economy across geographies since the outbreak of the coronavirus pandemic in 2020. After the deadly spells of the virus at regular intervals, which caused massive economic miseries worldwide, it’s the eruption of a full-fledged war between Russia and Ukraine in the beginning of the current year, which has complicated the economic recovery efforts. It’s worth mentioning that global economic recovery, after receiving a sharp setback due to the virulent Delta variant of the coronavirus, had regained some traction in the beginning of 2021 owing to monetary and fiscal stimuli pushed by governments across the globe. Now, the Russia-Ukraine War has not only considerably slowed down the economic recovery, but has also pushed it back to the wall. Precisely, the momentum in the economic growth recovery stands lost to the geopolitical tensions and a message is sounding loud across geographies that global recession is knocking at the door. Some economists even opine that recession is already around us and the problem is that we are not ready to accept the reality.
A few months back, a global research firm Nomura said that their US economics team had recently downgraded its base case for the US economy to a mild recession starting in Q4 2022, reflecting tighter financial conditions, a negative sentiment shock for consumers, worsening energy and food supply disruptions and weaker global growth prospects.
The research agency links this recession in the United States (US) to the Indian economy and warns that the impending growth slowdown in the US is set to hamper the growth trajectory of India in the medium term.
“In the medium term, with a ‘prolonged mild recession’ in the US, India’s economy is likely to see a growth slowdown. Growth challenges exist already, with India being the only Asian country whose inflation is furthest above its target,” analysts at Nomura said in their report.
Notably, Nomura data reveals that the US constitutes around 18% of India’s merchandise export market and over 60% of India’s IT-ITeS exports. Alongside, the broader global growth slowdown is also likely to weigh on India’s export and investment outlook.
The matter of the fact is that the US is sneezing and we are at a higher risk of catching the cold. This sneezing has always proved detrimental to the progress of economies in different geographies, including ours.
Amid this deteriorating global economic scenario, if experts are to be believed, another recession is on the cards and can hit the world at any time now. And India being an integral part of the global village, global recession will have its full-fledged innings here too. Domestic households across the internal geographies of the country have to remain alert and well prepared to avert this wave of recession. The base of a strong fight against recession is to handle consumerism with utmost care. Consumerism has to be meaningful not meaningless.
The landscape of consumerism has changed (and is still changing) a lot. Some two decades back, people used to hesitate to buy consumer goods which were not considered a necessity. Today, people lay hand on goods, irrespective of whether or not they are are actually needed.
With modern technology at the back, banks and financial institutions have been proactively capturing the profile of consumers and targeting them through emails, calls and messages offering pre-approved loan facility. More importantly, a trend is in place where banks chase consumers with their loan schemes to fund their every purchase. These financial institutions and banks have loaded almost every family with a new norm of monthly equated installments (EMIs) through their consumer loan offerings.
Here, this wave of consumer loans has taken the retail market by storm. People are granted on-the-spot loans at the time of their purchase. So, even if it is beyond their financial capacity, they are tempted to buy anything which is otherwise unimportant for them to possess.
Precisely, this easy lending scenario has got almost the whole generation into the net of the credit market. Mostly, availability of easy loan facility to lay hand on consumer goods and vehicles (two wheelers and cars) of their choice is luring the employees who see these easy loans as a financial freedom at their doorstep to spend. Today, we have a large section of people who are now accustomed to owning consumer goods, cars and two-wheelers not purely on need basis, but because some easy financial window offers a lending facility.
This indicates an immensely changed spending pattern not based on logic. For example, they frequently replace their consumer goods like television sets, mobile phone sets, refrigerators, washing machines etc. People have even become habitual of changing their cars and two-wheelers like any other ordinary gadget.
In this consumer-centric economic scenario, there are certain important precautions which a consumer needs to observe while shopping. Normally, spending sees an upward trend when earnings go up. So it makes sense to shop more when you are backed up sufficiently by your income. Entirely banking upon a loan with uncertain future income can result in debt trap.
In other words, spending is directly related to affordability. If you face any issue on the affordability front, better would be not to satiate your desires with loans. Experts have already expressed their worry over the fast growing consumerism which is mostly luring consumers to meaningless spending – of course, mostly at the back of a consumer loan. The current scenario indicates that the rate of increase in income levels of most of the consumers is not matching their spending. By taking a route through loans, they simply push themselves to the edge of a debt trap and economic stress.
In a nutshell, the best strategy would be to avoid being spendthrift. Spend meaningfully while leaning at the back of a bank loan, make yourself habitual of saving more and also invest in safe sectors to multiply your wealth.
However, at the same time, taking a bank loan is not a bad idea if such a loan earns you sufficiently more than what it costs to service the loan. Here it makes sense to ask yourself certain questions before making a meaningful purchase. Is it really necessary to buy something just because you want it? Is it absolutely essential or something so useful for your everyday life? How can you precisely challenge consumerism in the given scenario when recession is said to be knocking at the door?
In the words of an economic expert, it is time to rethink your spending habits, rediscover thoughtfulness and intent in your purchases, and remind yourselves that happiness is not on sale at the department store. Buying more is not the solution. Consumerism isn’t a pathway to joy and meaning in life.
Mindless consumption always results in more stress, more burden, more pressure to impress, more envy, less financial freedom, less generosity and less contentment.
Sajjad Bazaz heads Internal Communication Department of Jammu & Kashmir Bank Ltd. The views expressed are his own and not of the institution he works for.