This morning the Commerce Department reported that consumers sharply cut their spending this summer, the first quarter Americans have reduced spending since 1991. This reduction in spending is no surprise given the current financial crisis. Investors have lost billions of dollars in the stock market, there is a lack of liquidity in the credit markets and banking systems, and the job market is horrible. Consumers have lost confidence in the markets and it is pivotal that this confidence is restored so that the economy can emerge from this recession.
Our research (taken from the October Poll, NOTE: not statistically significant) suggests that corporate social responsibility could play an important role in rebuilding confidence. Over 75% of respondents indicated that some form of CSR would moderately or strongly increase their consumer confidence, while only 5% of respondents believe CSR would decrease their confidence in a corporation.
Our research did not dive into what CSR actions would be most helpful in rebuilding consumer confidence, but a few ideas come to mind. Financial institutions could increase the transparency of their accounting practices and provide customers with information about responsible lending. Corporations could invest in alternative energy or reduce their usage of water and paper to decrease operating expenses. The adoption of more robust social strategies is one way corporations can rebuild consumer confidence and get the economy back on track.
-Andrea Box & Aneesa Arshad
