Unemployment flirting with 10 percent, but Dow eclipses 10K, Google ads and Goldman bonuses flying high and ABC show about horny ‘cougars’ rejects big ad buy about same topic.
As we alluded to in our last rant here, most people’s outlook on the state of the U.S. economy depends on whether or not you’re working. With interest rates historically low, deals galore on the retail and housing fronts and the financial markets up over 20 percent this year, you’ve got pretty good buying power if you’re lucky enough to have a job. If you’re out of work -- like more able-bodied Americans are than at any time in a quarter century, then things aren’t looking too rosy.
Employers are mired in a long-term hiring and capital investment freeze. More homeowners than ever are underwater on the mortgages and/or not keeping current with their payments. New companies, or new divisions of existing aren’t being formed to create new jobs. Older workers are afraid to leave the workforce due to insecurity over their retirement accounts and that’s clogging up the normal payroll succession plan as millions of energetic new college graduates can’t get a foot in the door.
The challenge for today’s marketers is to resonate with all sectors of your customer base, regardless of what life circumstances they’re encountering, and that means a one-size fits all global branding campaign may not do the trick.
So, how are global marketers responding? They’re tapping into that “less worse than last year” psychology and slowly reinvesting in their brands.
Stephanie Clifford of the NY Times had a nice take on this phenomenon the other day,
“It may be a sign that the recession is ending, or it may be a sign that consumers are sick of hearing about it,” quipped NY Times columnist, Stephanie Clifford last week. “While economists and investors study housing starts and gross domestic product predictions to measure economic vibrancy, General Electric (“The American renewal is happening right now”), Bank of America (“America. Growing stronger every day”), Levi’s (“Pioneers! O Pioneers!”) and other companies are using commercials to proclaim that America’s future is bright. And that may be something of a self-fulfilling prophecy.” Let’s hope she’s right. As Brand Union/WPP’s Robert Scalea told Clifford: “Marketing is always a reflection of societal values, and many times, for smarter marketers, it’s a driver of them.”
Google vs. Dow as bellwether of the ad economy
On Thursday, Google reported better than expected Q3 financial results – 27 percent increase in net income -- on the strength of its ad sales program. CEO, Eric Schmidt declared the worst of the recession over and that Google was embarking on a new phase of investment, hiring and acquisitions. Many analysts contend that Google’s results are closely correlated with online spending – one of the few bright spots in the advertising sector --- and are likely to be trumpeted across many sectors of the industry.
“We’re seeing double-digit increases in budgets for 2010 from our clients,” Bryan Wiener, head of digital agency 360i {www.360i.com} told The New York Times last week.
How will you read magazines in 10 years?
From Conde Nast to McGraw Hill to the Economist Group, it’s clear that the cash cow of print-based, high-ticket, hard-to-measure, brand advertising has been slaughtered. Conde shuttered four titles, including the much-admired Gourmet. Bloomberg LLP snagged Business Week for next to nothing and Economist Group’s editorially poignant, but ad-challenged CFO still can’t get a date to the buyout prom.
Is that finally it for the magazine medium? We think not. Magazines will continue to be relevant, but how we engage in them may be changed forever. Over the next decade, three in five “readers” of magazines won’t be interacting with their favorite titles in dead-tree form, according to a recent survey of nearly 400 Wall Street Journal readers. Nearly 30 percent said they’d be reading online; another 20 percent said they’d be reading via E-reader or mobile device and nearly one in 10 said they wouldn’t be reading at all.
If print media is a key component of your marketing mix, then you better take notice.
How will you read magazines in 10 years?
PRINT*********42%
ONLINE********29%
E-READER******17%
PHONE**********3%
I WON’T********9%
Source: Wall Street Journal
Said one respondent to the WSJ survey: “Unfortunately the selection for how we will read magazines in the future is too simplistic. If wise, publishers will realize that that are creating content and can deliver it in different forms, print, online, phone e-reader and not as magazines but as articles, so that if I am interested in food, I can read a gourmet article from ‘gourmet magazine’ which as a magazine of today's format need not exist.” Brother, you got that right.
Are these TV people for real?
David Letterman, the curmudgeonly late night talk show host for CBS and product Worldwide (Can’t Keep it in My) Pants, gets exposed for running a broadcast equivalent of the Wall Street Boom-Boom run in his offices and gets an instant ratings boost. Jay Leno, who was supposed to be dead in the water in prime time is far exceeding rating expectations. For a fraction of what it costs to put on a prime time drama, Leno is helping NBC rake in the profits by re-reading local newspaper headlines, quizzing airhead LA pedestrians about current events and challenging B-list celebs to simulate slow-speed car chases on a Burbank studio parking lost. And it works. So to all the cable shows about house-flipping, home makeovers and savvy real-estate investing at a time when record numbers of Americans are in foreclosure or underwater on their mortgages. Then there’s Cougar Town, ABC’s popular new Courtney Cox sitcom about spurned 40-something women prowling for 20-something studly men. More than seven million viewers are tuning in each week and apparently the has enough ad dough in the pipeline to turn down a huge proposed media buy from a Web site for real-life cougars on the grounds of decency concerns.
We’re not passing ethical judgment here. We’re just pointing out that the mood has lightened up enough in this country so that support for these shows, and the vicarious thrills they provide, may point to hopes of better times ahead.
Conclusion
As a Miami University professor noted in the aforementioned Stephanie Clifford piece: “The truth is, we want to believe they’re right. Deep down inside, even skeptics want to be hopeful” in these times.
Showing posts with label economic recovery. Show all posts
Showing posts with label economic recovery. Show all posts
Monday, October 19, 2009
Wednesday, September 30, 2009
Bad News, Recession Over. Risk Taking, Personal Savings Up
Are companies ready for pent up spike in demand? M&A, IPOs, SPACs return. Fasten seatbelts as ides of October approach on anniversary of financial crisis. Have we learned anything?
With the Dow Jones Industrial Average knocking on the door of 10,000 – a benchmark seemingly out of reach six months ago – and nationwide home prices up for the second straight month, both leading and trailing indicators of the economic rebound we first called in this blog in April are all around us. From a technical perspective, the "recession is very likely over at this point," U.S. Federal Reserve Chairman, Ben Bernanke said in a mid-month Q&A session at the Brookings Institution. So why aren’t homeowners and job seekers rejoicing, let alone the marketers who target them?
The Dow 10,000 barrier is mostly psychological, but as Stuart Freeman, senior equity analyst at Wells Fargo Advisors told the New York Times this week: “It’s psychological, but if enough people act on it it’s meaningful. The higher the market goes, the more those on the sidelines sit there and are concerned they’re missing something.”
Why we’re still worried
Home prices nationwide are still 13.3 percent lower than a year earlier, according to the widely followed S&P/Case Schiller Index, but recent monthly gains show that the pace of decline has slowed. Housing aside, several trends concern us at this juncture. First, the Government, including the Fed, is not in the forecasting business. It’s in the restating-the-obvious-but-making-it-official business. Second, we’re not convinced the fundamentals are there to support a sustained rally in the economy. More on that in a minute. Third, and perhaps most frightening, is this economic turnaround might be for real.
What’s wrong with that you say? Plenty. For starters, most companies are not be prepared to handle the surge in pent up demand, as they trimmed their workforces, production capabilities, customer service departments and marketing budgets so severely during the downturn. Cost-cutting occurs faster and deeper, than re-hiring and re-investing. The only thing worse than having customers bail on you when times are lousy is having them bail on you because you can’t handle their orders when times are better.
And here’s where it gets tricky. Even if the Fed and the financial markets are correctly signaling the end of the Great Recession of 2008-09, 15 million able-bodied workers – about 10 percent of the full-time work force -- are out of work. Combine that with stagnant incomes for all workers and higher rates of personal saving (due to fear, not financial discipline) and this could reduce corporate revenue for years to come. We’re also dealing with massive consumer defaults on credit cards, record numbers of mortgage defaults, delinquent student loans and stagnant incomes for those lucky enough to be working. Oh, and housing unit sales (not prices) went down another 2.7 percent in August, we learned last week.
Where is the money going to come from, to purchase those goods and services we need to keep the economy humming? More than 70 percent of Americans still rate the job market “bad” according to a recent Harris Poll. Paychecks have been stagnant for about a decade and using one’s home equity as an ATM machine – essentially what kept the Great Recession at bay for about three years – isn’t a viable fallback this time around.
Cautious Optimism for The Economy Ahead
Results of the latest Harris Poll of 2,498 U.S. adults surveyed online show that there is a slight sense of optimism regarding the economy. Nearly half (46%) of Americans believe the economy will improve in the coming year, while a third (32%) say it will stay the same and 22 percent believe it will get worse. In May, just under two in five believed the economy would improve in the coming year while over one-quarter said they thought it would get worse. But overall, they’re not so confident about their own situation, which is a great departure from most economic climates in which survey respondents tend to say they’re better off – not worse off -- than their neighbors.
One-quarter of Americans believe that their household financial condition will be better in six months while half say it will remain the same and 28 percent believe it will get worse. If there’s a silver lining to this cloud, consider that the 28 percent who say their household's financial condition will get worse in the next six months is the lowest reading for this question since Harris pollsters first asked in February of 2008.
Greed and irrational exuberance
Twitter –- a 60-person online social networking company with a catchy name and no revenue to speak of, was recently valued at $1 billion as it announced plans to raise $100 million to salivating venture capitalists. The markets also bounded higher on signs that companies once again had enough cash, credit and confidence to enter into big M&A deals. Xerox, Abbot Labs, Dell, Disney and Kraft Foods have announced takeover plans. Could credit really be flowing again between banks and corporate giants? At least the lawyers are happy.
What’s more, last week was the busiest for companies completing IPOs since December 2007. The Wall Street Journal reports some two dozen firms have filed plans to go public in the past two months, which is twice the number who filed to go public in the first seven months of this year. Has the IPO pendulum swung back to “Initial Public Offering” from two years of “It’s Pretty-Much Over”?
If that’s not enough to convince you investors are regaining their appetite for risk, more than one billion dollars in acquisitions took place last week through special purpose acquisition companies (SPACs). What’s a SPAC? It’s basically a “blank check offering” that allows investors to raise money through an initial public offering, and then gives them up to two years to buy a business as long as the sale receives shareholder approval. Sounds pretty spaculative.
Media spending still lagging
More than one-third of marketers plan to cut their advertising budgets over the next six months, according to he latest Association of National Advertisers (ANA) study. While an improvement from the 50-percent budget cutting threshold ANA reported earlier this year, the times ain’t exactly flush for marketers or media owners. As even ANA will admit, budget cutting tends to get under-reported in forward looking surveys (turns out 61% of marketers, not 50% cut their budgets over the past six month, according to ANA research).
If you’re a media buyer, now might be the time to pounce, as traditional media owners will do just about anything to get your business. The top 100 advertisers spent 10.2 percent less than they did in the previous year, according to the latest data from TNS media Intelligence and magazine ad pages are down 22 percent through October according to the latest Publishers Information Bureau. Network TV spending was down six percent, and newspaper advertising was down nearly 11 percent over the same period, TNS reports.
Another disturbing data point for media owners is that new research indicates lead generation is what advertisers want these days, not building brands or customer “buzz.” That means every dollar counts and will be measured and held accountable. Nearly 70 percent of marketers surveyed by MarketingSherpa last month said “Generating High Quality Leads” was their biggest challenge, more than twice the number who pointed to brand building, public relations buzz and nearly twice the number who pointed to creating perceived value in “cutting edge” product benefits.
The one bright spot, not surprisingly, was Internet display advertising – up 10.8 percent -- as more marketers shifted funds online. “Perpetual movement is the essence of survival and prosperity online,” quipped Michael Moritz, the Sequoia Capital investor who backed Google, Yahoo and Sugar a fast growing consumer blog network in a New York Times interview last week. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”
Welcome to Q4, the last fiscal quarter of this topsy turvey decade. Fasten your seat belts.
With the Dow Jones Industrial Average knocking on the door of 10,000 – a benchmark seemingly out of reach six months ago – and nationwide home prices up for the second straight month, both leading and trailing indicators of the economic rebound we first called in this blog in April are all around us. From a technical perspective, the "recession is very likely over at this point," U.S. Federal Reserve Chairman, Ben Bernanke said in a mid-month Q&A session at the Brookings Institution. So why aren’t homeowners and job seekers rejoicing, let alone the marketers who target them?
The Dow 10,000 barrier is mostly psychological, but as Stuart Freeman, senior equity analyst at Wells Fargo Advisors told the New York Times this week: “It’s psychological, but if enough people act on it it’s meaningful. The higher the market goes, the more those on the sidelines sit there and are concerned they’re missing something.”
Why we’re still worried
Home prices nationwide are still 13.3 percent lower than a year earlier, according to the widely followed S&P/Case Schiller Index, but recent monthly gains show that the pace of decline has slowed. Housing aside, several trends concern us at this juncture. First, the Government, including the Fed, is not in the forecasting business. It’s in the restating-the-obvious-but-making-it-official business. Second, we’re not convinced the fundamentals are there to support a sustained rally in the economy. More on that in a minute. Third, and perhaps most frightening, is this economic turnaround might be for real.
What’s wrong with that you say? Plenty. For starters, most companies are not be prepared to handle the surge in pent up demand, as they trimmed their workforces, production capabilities, customer service departments and marketing budgets so severely during the downturn. Cost-cutting occurs faster and deeper, than re-hiring and re-investing. The only thing worse than having customers bail on you when times are lousy is having them bail on you because you can’t handle their orders when times are better.
And here’s where it gets tricky. Even if the Fed and the financial markets are correctly signaling the end of the Great Recession of 2008-09, 15 million able-bodied workers – about 10 percent of the full-time work force -- are out of work. Combine that with stagnant incomes for all workers and higher rates of personal saving (due to fear, not financial discipline) and this could reduce corporate revenue for years to come. We’re also dealing with massive consumer defaults on credit cards, record numbers of mortgage defaults, delinquent student loans and stagnant incomes for those lucky enough to be working. Oh, and housing unit sales (not prices) went down another 2.7 percent in August, we learned last week.
Where is the money going to come from, to purchase those goods and services we need to keep the economy humming? More than 70 percent of Americans still rate the job market “bad” according to a recent Harris Poll. Paychecks have been stagnant for about a decade and using one’s home equity as an ATM machine – essentially what kept the Great Recession at bay for about three years – isn’t a viable fallback this time around.
Cautious Optimism for The Economy Ahead
Results of the latest Harris Poll of 2,498 U.S. adults surveyed online show that there is a slight sense of optimism regarding the economy. Nearly half (46%) of Americans believe the economy will improve in the coming year, while a third (32%) say it will stay the same and 22 percent believe it will get worse. In May, just under two in five believed the economy would improve in the coming year while over one-quarter said they thought it would get worse. But overall, they’re not so confident about their own situation, which is a great departure from most economic climates in which survey respondents tend to say they’re better off – not worse off -- than their neighbors.
One-quarter of Americans believe that their household financial condition will be better in six months while half say it will remain the same and 28 percent believe it will get worse. If there’s a silver lining to this cloud, consider that the 28 percent who say their household's financial condition will get worse in the next six months is the lowest reading for this question since Harris pollsters first asked in February of 2008.
Greed and irrational exuberance
Twitter –- a 60-person online social networking company with a catchy name and no revenue to speak of, was recently valued at $1 billion as it announced plans to raise $100 million to salivating venture capitalists. The markets also bounded higher on signs that companies once again had enough cash, credit and confidence to enter into big M&A deals. Xerox, Abbot Labs, Dell, Disney and Kraft Foods have announced takeover plans. Could credit really be flowing again between banks and corporate giants? At least the lawyers are happy.
What’s more, last week was the busiest for companies completing IPOs since December 2007. The Wall Street Journal reports some two dozen firms have filed plans to go public in the past two months, which is twice the number who filed to go public in the first seven months of this year. Has the IPO pendulum swung back to “Initial Public Offering” from two years of “It’s Pretty-Much Over”?
If that’s not enough to convince you investors are regaining their appetite for risk, more than one billion dollars in acquisitions took place last week through special purpose acquisition companies (SPACs). What’s a SPAC? It’s basically a “blank check offering” that allows investors to raise money through an initial public offering, and then gives them up to two years to buy a business as long as the sale receives shareholder approval. Sounds pretty spaculative.
Media spending still lagging
More than one-third of marketers plan to cut their advertising budgets over the next six months, according to he latest Association of National Advertisers (ANA) study. While an improvement from the 50-percent budget cutting threshold ANA reported earlier this year, the times ain’t exactly flush for marketers or media owners. As even ANA will admit, budget cutting tends to get under-reported in forward looking surveys (turns out 61% of marketers, not 50% cut their budgets over the past six month, according to ANA research).
If you’re a media buyer, now might be the time to pounce, as traditional media owners will do just about anything to get your business. The top 100 advertisers spent 10.2 percent less than they did in the previous year, according to the latest data from TNS media Intelligence and magazine ad pages are down 22 percent through October according to the latest Publishers Information Bureau. Network TV spending was down six percent, and newspaper advertising was down nearly 11 percent over the same period, TNS reports.
Another disturbing data point for media owners is that new research indicates lead generation is what advertisers want these days, not building brands or customer “buzz.” That means every dollar counts and will be measured and held accountable. Nearly 70 percent of marketers surveyed by MarketingSherpa last month said “Generating High Quality Leads” was their biggest challenge, more than twice the number who pointed to brand building, public relations buzz and nearly twice the number who pointed to creating perceived value in “cutting edge” product benefits.
The one bright spot, not surprisingly, was Internet display advertising – up 10.8 percent -- as more marketers shifted funds online. “Perpetual movement is the essence of survival and prosperity online,” quipped Michael Moritz, the Sequoia Capital investor who backed Google, Yahoo and Sugar a fast growing consumer blog network in a New York Times interview last week. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”
Welcome to Q4, the last fiscal quarter of this topsy turvey decade. Fasten your seat belts.
Thursday, July 23, 2009
Ad Spending Plans, Economic Indicators Trending Up
Will agencies, consumers join the party? Business Week on the block.
Business Week is officially up for sale and there ain’t exactly a bidding war brewing for the once venerable bible of the business world. The nationwide unemployment rate closes in on a generation-high 10 percent and housing prices languish, yet new research indicates economic pessimism among marketers, and to a lesser extent, agency media buyers appears to have bottomed out last spring. NOTE: If you recall, we called the recession statistically all but over in this blog back in early April although we cautioned it could take 12 months or more for spending, confidence and decision-making to improve.
Ad spending was miserable in the first half of 2009 –- down nearly 15 percent according to Interpublic group -– but ad spending PLANS are now trending upward, according to a new report from Advertiser Perceptions Inc (API). API says Cable TV and outdoor media also are improving and now have more media decision makers planning to boost their budgets than to decrease them over the next six months, and while broadcast TV, radio, magazines and national newspapers all are still negative on balance, they are also all improving from low confidence points earlier this year.
"Leading the way are marketers, who are more optimistic than their agencies," said API partner, Ken Pearl, in a statement. API historically conducts big semi-annual surveys tracking the perceptions of advertisers and agency media buyers about the major media, including their confidence levels, but opted to conduct the confidence tracking more frequently this year to monitor an inflection point in the advertising economy.
The most recent survey, which is based on the responses of more than 200 media decision makers over the past several weeks, indicates that their plans for most major media are once again ascending, especially among marketers who seem slightly more optimistic than their agency counterparts.
Ad Optimism Is Improving For Most Media, High For Mobile/Online
MEDIA ....“OPTIMISM”...........STATUS........TREND
Mobile ......57............. Optimistic....Improving
Online.......53..............Optimistic....Improving
Cable TV.... 17..............Optimistic....Improving
Outdoor......12..............Optimistic....Improving
Broadcast TV.-7..............Pessimistic...Improving
Radio........-12.............Pessimistic...Improving
Magazines....-17.............Pessimistic...Improving
Natl. Newsp..-36.............Pessimistic...Improving
Local Newsp..-47.............Pessimistic...Declining
Source: Advertiser Perceptions Inc. "Optimism" is defined by the number of percentage points separating the percentages of respondents citing plans to increase or decrease their advertising budgets in each medium over the next six months. Trends are based over three bi-monthly tracking reports conducted so far this year.
“It's imperative that we begin to shake up the way we think about traditional media,” commented a reader of Joe Mandese’s popular MediaPost column. “It's a fallacy that each medium is an island unto itself. We must move into a new phase of using all the media we have available to us in concert with one another.
Said another poster: “Being in Media ad sales it is good to see a positive trend at last. This generally means that business is starting to move past the current recession. Since the Fall is buying season it would be nice to hear something other than ‘no budget’”.
Let’s hope marketers and agencies are putting their money where their mouths are and focusing on the road ahead, not the rear view mirror. Just make sure you folks stay off your cell phones when driving.
Business Week is officially up for sale and there ain’t exactly a bidding war brewing for the once venerable bible of the business world. The nationwide unemployment rate closes in on a generation-high 10 percent and housing prices languish, yet new research indicates economic pessimism among marketers, and to a lesser extent, agency media buyers appears to have bottomed out last spring. NOTE: If you recall, we called the recession statistically all but over in this blog back in early April although we cautioned it could take 12 months or more for spending, confidence and decision-making to improve.
Ad spending was miserable in the first half of 2009 –- down nearly 15 percent according to Interpublic group -– but ad spending PLANS are now trending upward, according to a new report from Advertiser Perceptions Inc (API). API says Cable TV and outdoor media also are improving and now have more media decision makers planning to boost their budgets than to decrease them over the next six months, and while broadcast TV, radio, magazines and national newspapers all are still negative on balance, they are also all improving from low confidence points earlier this year.
"Leading the way are marketers, who are more optimistic than their agencies," said API partner, Ken Pearl, in a statement. API historically conducts big semi-annual surveys tracking the perceptions of advertisers and agency media buyers about the major media, including their confidence levels, but opted to conduct the confidence tracking more frequently this year to monitor an inflection point in the advertising economy.
The most recent survey, which is based on the responses of more than 200 media decision makers over the past several weeks, indicates that their plans for most major media are once again ascending, especially among marketers who seem slightly more optimistic than their agency counterparts.
Ad Optimism Is Improving For Most Media, High For Mobile/Online
MEDIA ....“OPTIMISM”...........STATUS........TREND
Mobile ......57............. Optimistic....Improving
Online.......53..............Optimistic....Improving
Cable TV.... 17..............Optimistic....Improving
Outdoor......12..............Optimistic....Improving
Broadcast TV.-7..............Pessimistic...Improving
Radio........-12.............Pessimistic...Improving
Magazines....-17.............Pessimistic...Improving
Natl. Newsp..-36.............Pessimistic...Improving
Local Newsp..-47.............Pessimistic...Declining
Source: Advertiser Perceptions Inc. "Optimism" is defined by the number of percentage points separating the percentages of respondents citing plans to increase or decrease their advertising budgets in each medium over the next six months. Trends are based over three bi-monthly tracking reports conducted so far this year.
“It's imperative that we begin to shake up the way we think about traditional media,” commented a reader of Joe Mandese’s popular MediaPost column. “It's a fallacy that each medium is an island unto itself. We must move into a new phase of using all the media we have available to us in concert with one another.
Said another poster: “Being in Media ad sales it is good to see a positive trend at last. This generally means that business is starting to move past the current recession. Since the Fall is buying season it would be nice to hear something other than ‘no budget’”.
Let’s hope marketers and agencies are putting their money where their mouths are and focusing on the road ahead, not the rear view mirror. Just make sure you folks stay off your cell phones when driving.
Friday, April 03, 2009
Recession Running Out of Steam
When will decision-making freeze start to thaw?
Remember back in late 2007 when you got that disturbing memo from the U.S. Department of Commerce announcing plans to kick-off the next great global recession? Of course not. So what makes you think you’re going to be notified when this painful economic downturn finally ends? Trust me, you’re not.
By the time you get the “all clear” signal and spread the good news to your colleagues, it’ll be too late. Your competitors -- who smartly put new products and services into the pipeline during the depths of the downturn – will have passed you by. Their salespeople will have a leg up on yours, with a much better story to tell potential customers. And since they didn’t can all their experienced (i.e. more expensive) people and slash their marketing budgets as severely as you did during the “panic,” they’re taking away big chunks of your market share and mindshare every day. Good luck getting that back …..It’ll only take a few years.
Granted, we’ve got a long way to go. As I write this, the U.S. Labor Department is announcing 663,000 more U.S. jobs vaporized in March. That’s pushing the official unemployment rate to 8.5 percent, its highest level in 25 years. But, in this hyper-speed global economic climate, you’ve got to have new products, services and people at the ready to support them in advance when pent up demand for your goods is finally unleashed. And this is going to be one heck of a release.
Not convinced we’re on the road to recovery. Read on (or go jump off a ledge).
1. Economists and Wall Street analysts (egged on by the media) have successfully predicted 15 of the last three recessions. They have the same lousy battering average predicting recoveries and no bona fide “expert” has stepped up to give the green light on this recovery yet. So I like our chances.
2. The labor market historically lags the stock market and other economic indicators by six to 12 months. Even today’s depressing news about the job market was largely discounted by investors as the grim job loss numbers, albeit painful, were in line with what analysts and investors expected. The market actually went up again today and continued its four-week rally in which it has gained 21 percent– its best four-week advance since July 1938.
READER NOTE: I recommend Barton Biggs’ tome: “Wealth, War and Wisdom” (Wiley & Sons, 2008) for a great perspective on the stock market’s ability to forecast global economic conditions during the 1930s and 1940s. The parallels are striking between today’s climate and that of the Great Depression and World War II. It’s a scary, but interesting read (Disclosure: we have no financial interest in sales or promotion of Mr. Biggs’ book).
3. Manufacturing. The Institute for Supply Management said its March report index rose 36.3, from 35.8 a month ago. New factory orders increased 8.1 percent and General Motors isn’t going to be allowed to make cars anymore unless it starts making them affordable, reliable and environmentally sound.
4. Housing. The National Association of Realtors reported that sales of pending homes rose a seasonally adjusted 2.1 percent in February from a month earlier, bolstered by double-digit increases in the Northeast and Midwest. The index of pending-home sales — which encompasses deals that have signed contracts but have not closed — bounced off a record low. The group’s index of affordability rose to a record as home prices continued to slide and mortgage rates declined to a microscopic 4.61 percent.
5. Huge cash on the sidelines. The stock market is rallying at a time when four out of five institutions and affluent individual investors are planning to switch advisors. “It’s an amazing time with huge upside potential for everyone, including financial advisors,” notes HB client, John Bowen, founder of CEG Worldwide, LLC the nation’s leading coaching, research and advisory firm for wealth management professionals. “This is not a recession or The Great Depression again. It’s The Great Disruption,” says Bowen. The rules of the game are changing fast and will never go back to where we were before. Despite massive erosion of investor wealth over the past 12 months, John’s firm and his clients are actually having one of their best years ever.
6. Broad-based rally. On most positive trading days the Russell 2000 has outgained the S&P500, which has outpaced the Dow Jones index. Companies of all size, industries and market caps are starting to rebound.
7. The Financial Accounting Standards Board (FASB) might finally change the rules on "mark to market" ccounting so bank assets will be measured by their cash flow, not the last trade. Not only is this a healthy dose of pragmatism but it could dramatically impact bank financial statements, valuations and profitability.
8. Labor shortage. That’s right, we said shortage. Even with unemployment rising, some companies now realize they may have cut back their payrolls too aggressively. Duh! Workers who survived the cuts are doing at least twice the work they did before for the same pay or less. They’re burned-out, paranoid, dispirited, and planning their exit strategies, not thinking about company growth.
A neighbor of mine runs an online lead generation company and customer acquisition service. He said some of his clients’ sales reps are taking days, even weeks, to respond to even high-priority leads. They simply don’t have enough manpower to handle demand. He said one of his clients in the mortgage finance is begging her boss to hire back at least 80 of the loan officers they let go in 2008 to handle the workload.
9. Some of the more innovative and adaptable sectors of the advertising industry are still growing at impressive rates. For instance, Internet advertising rose in 2008, according to a report released earlier this week by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising in the United States grew to $23.4 billion in 2008, an increase of 10.6 percent from 2007, according to the Internet Advertising Revenue Report from the Interactive Advertising Bureau, a trade group representing online advertisers. That was the only category of advertising spending that grew in 2008 other than cable television, which rose 7.8 percent, according to Nielsen figures supplied for the report.
10. Weather. While our hearts go out to those in the flood-ravaged upper Midwest, spring has come to the Northeast, where let’s face it, a great deal of major companies and investment firms reside. There’s always a feeling of accomplishment in these parts that you’ve survived another winter and the onset of spring make everyone feel better and more optimistic. And for many home owners in the northeast, heating oil prices (our biggest worry nine months ago…HA!) ended up being only half as high as what we were dreading as recently as last summer.
11. Hero redemption. Tiger Woods is back on the pro golf tour and Lance Armstrong is cycling again. I don’t play golf, but a great number of corporate decision-makers still do and more than a few are biking and triathloning. After surviving cancer, drug allegations and now a broken collar-bone, Lance will some how manage to get himself into contention for an unprecedented 8th win at the Tour de France, the world’s toughest athletic event. Meanwhile, Tiger won the Arnold Palmer Invitational in typically dramatic last-hole fashion, his first competition after a year-long injury layoff. TV ratings were through the roof and that’s yet another sign for the corner office-set that things may be finally returning to normal in the world.
12. Even lawyers are taking a hit. The days of fat retainers, exorbitant hourly rates and paying first year associates more than the President of the United States makes, may be coming to an end. Law firms may have to start charging clients on a fixed-fee project basis, like every other professional service firm does. Leading law firms have historically avoided mass layoffs, concerned that their reputations would take a hit. But some have been putting those inhibitions aside. The Law Shucks blog now has a “layoff tracker,” and it is pretty telling. Top firms are rapidly thinning their ranks, and several — including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 — have closed. While not a lawyer basher by nature, having law firms align their fees and associate compensation with the rest of us will make everyone’s goods and services a little more affordable.
13. Perspective. Whether or not you believe the worst of this crisis is over, we may finally be taking a healthier approach to work-life balance in this country. “Today’s average business person exists in a perpetual state of exhaustion and stress that is born out of feeling that they are burdened by more responsibilities to meet than they have time and energy to devote to doing so,” said Chuck Peck, CEO of Cape Coral, Florida-based Wealth Intelligence Network. “They work, work, work, yet feel they are merely chasing their own tails. They never seem to be able to meet all the obligations of life without neglecting their commitments to themselves, their relationships, and their families, and vice versa.” The key, says Peck, is to keep moving. “An object at rest stays at rest; an object in motion stays in motion. Always stay in motion.”
Words to live by.
So let’s get back to work. Hire good people to help us and treat them right. Market the heck out of what we have to offer and let’s start making money again.
Remember back in late 2007 when you got that disturbing memo from the U.S. Department of Commerce announcing plans to kick-off the next great global recession? Of course not. So what makes you think you’re going to be notified when this painful economic downturn finally ends? Trust me, you’re not.
By the time you get the “all clear” signal and spread the good news to your colleagues, it’ll be too late. Your competitors -- who smartly put new products and services into the pipeline during the depths of the downturn – will have passed you by. Their salespeople will have a leg up on yours, with a much better story to tell potential customers. And since they didn’t can all their experienced (i.e. more expensive) people and slash their marketing budgets as severely as you did during the “panic,” they’re taking away big chunks of your market share and mindshare every day. Good luck getting that back …..It’ll only take a few years.
Granted, we’ve got a long way to go. As I write this, the U.S. Labor Department is announcing 663,000 more U.S. jobs vaporized in March. That’s pushing the official unemployment rate to 8.5 percent, its highest level in 25 years. But, in this hyper-speed global economic climate, you’ve got to have new products, services and people at the ready to support them in advance when pent up demand for your goods is finally unleashed. And this is going to be one heck of a release.
Not convinced we’re on the road to recovery. Read on (or go jump off a ledge).
1. Economists and Wall Street analysts (egged on by the media) have successfully predicted 15 of the last three recessions. They have the same lousy battering average predicting recoveries and no bona fide “expert” has stepped up to give the green light on this recovery yet. So I like our chances.
2. The labor market historically lags the stock market and other economic indicators by six to 12 months. Even today’s depressing news about the job market was largely discounted by investors as the grim job loss numbers, albeit painful, were in line with what analysts and investors expected. The market actually went up again today and continued its four-week rally in which it has gained 21 percent– its best four-week advance since July 1938.
READER NOTE: I recommend Barton Biggs’ tome: “Wealth, War and Wisdom” (Wiley & Sons, 2008) for a great perspective on the stock market’s ability to forecast global economic conditions during the 1930s and 1940s. The parallels are striking between today’s climate and that of the Great Depression and World War II. It’s a scary, but interesting read (Disclosure: we have no financial interest in sales or promotion of Mr. Biggs’ book).
3. Manufacturing. The Institute for Supply Management said its March report index rose 36.3, from 35.8 a month ago. New factory orders increased 8.1 percent and General Motors isn’t going to be allowed to make cars anymore unless it starts making them affordable, reliable and environmentally sound.
4. Housing. The National Association of Realtors reported that sales of pending homes rose a seasonally adjusted 2.1 percent in February from a month earlier, bolstered by double-digit increases in the Northeast and Midwest. The index of pending-home sales — which encompasses deals that have signed contracts but have not closed — bounced off a record low. The group’s index of affordability rose to a record as home prices continued to slide and mortgage rates declined to a microscopic 4.61 percent.
5. Huge cash on the sidelines. The stock market is rallying at a time when four out of five institutions and affluent individual investors are planning to switch advisors. “It’s an amazing time with huge upside potential for everyone, including financial advisors,” notes HB client, John Bowen, founder of CEG Worldwide, LLC the nation’s leading coaching, research and advisory firm for wealth management professionals. “This is not a recession or The Great Depression again. It’s The Great Disruption,” says Bowen. The rules of the game are changing fast and will never go back to where we were before. Despite massive erosion of investor wealth over the past 12 months, John’s firm and his clients are actually having one of their best years ever.
6. Broad-based rally. On most positive trading days the Russell 2000 has outgained the S&P500, which has outpaced the Dow Jones index. Companies of all size, industries and market caps are starting to rebound.
7. The Financial Accounting Standards Board (FASB) might finally change the rules on "mark to market" ccounting so bank assets will be measured by their cash flow, not the last trade. Not only is this a healthy dose of pragmatism but it could dramatically impact bank financial statements, valuations and profitability.
8. Labor shortage. That’s right, we said shortage. Even with unemployment rising, some companies now realize they may have cut back their payrolls too aggressively. Duh! Workers who survived the cuts are doing at least twice the work they did before for the same pay or less. They’re burned-out, paranoid, dispirited, and planning their exit strategies, not thinking about company growth.
A neighbor of mine runs an online lead generation company and customer acquisition service. He said some of his clients’ sales reps are taking days, even weeks, to respond to even high-priority leads. They simply don’t have enough manpower to handle demand. He said one of his clients in the mortgage finance is begging her boss to hire back at least 80 of the loan officers they let go in 2008 to handle the workload.
9. Some of the more innovative and adaptable sectors of the advertising industry are still growing at impressive rates. For instance, Internet advertising rose in 2008, according to a report released earlier this week by the Interactive Advertising Bureau and PricewaterhouseCoopers. Internet advertising in the United States grew to $23.4 billion in 2008, an increase of 10.6 percent from 2007, according to the Internet Advertising Revenue Report from the Interactive Advertising Bureau, a trade group representing online advertisers. That was the only category of advertising spending that grew in 2008 other than cable television, which rose 7.8 percent, according to Nielsen figures supplied for the report.
10. Weather. While our hearts go out to those in the flood-ravaged upper Midwest, spring has come to the Northeast, where let’s face it, a great deal of major companies and investment firms reside. There’s always a feeling of accomplishment in these parts that you’ve survived another winter and the onset of spring make everyone feel better and more optimistic. And for many home owners in the northeast, heating oil prices (our biggest worry nine months ago…HA!) ended up being only half as high as what we were dreading as recently as last summer.
11. Hero redemption. Tiger Woods is back on the pro golf tour and Lance Armstrong is cycling again. I don’t play golf, but a great number of corporate decision-makers still do and more than a few are biking and triathloning. After surviving cancer, drug allegations and now a broken collar-bone, Lance will some how manage to get himself into contention for an unprecedented 8th win at the Tour de France, the world’s toughest athletic event. Meanwhile, Tiger won the Arnold Palmer Invitational in typically dramatic last-hole fashion, his first competition after a year-long injury layoff. TV ratings were through the roof and that’s yet another sign for the corner office-set that things may be finally returning to normal in the world.
12. Even lawyers are taking a hit. The days of fat retainers, exorbitant hourly rates and paying first year associates more than the President of the United States makes, may be coming to an end. Law firms may have to start charging clients on a fixed-fee project basis, like every other professional service firm does. Leading law firms have historically avoided mass layoffs, concerned that their reputations would take a hit. But some have been putting those inhibitions aside. The Law Shucks blog now has a “layoff tracker,” and it is pretty telling. Top firms are rapidly thinning their ranks, and several — including Heller Ehrman, a venerable 500-plus-lawyer firm founded in 1890 — have closed. While not a lawyer basher by nature, having law firms align their fees and associate compensation with the rest of us will make everyone’s goods and services a little more affordable.
13. Perspective. Whether or not you believe the worst of this crisis is over, we may finally be taking a healthier approach to work-life balance in this country. “Today’s average business person exists in a perpetual state of exhaustion and stress that is born out of feeling that they are burdened by more responsibilities to meet than they have time and energy to devote to doing so,” said Chuck Peck, CEO of Cape Coral, Florida-based Wealth Intelligence Network. “They work, work, work, yet feel they are merely chasing their own tails. They never seem to be able to meet all the obligations of life without neglecting their commitments to themselves, their relationships, and their families, and vice versa.” The key, says Peck, is to keep moving. “An object at rest stays at rest; an object in motion stays in motion. Always stay in motion.”
Words to live by.
So let’s get back to work. Hire good people to help us and treat them right. Market the heck out of what we have to offer and let’s start making money again.
Subscribe to:
Posts (Atom)
Posts
