You can tell a lot about attitudes and the future by the specifics of what people are and are not buying.
For example, to say “consumer sales” are down is one thing. But precise information on what products are off and which are doing well would yield a far more comprehensive picture.
Ten months ago, I completed work on a product designed specifically for managers in our industry. Turbulent Times! A Manager’s Guide for Navigating Difficult Markets is a studio-produced 5-volume CD series with a remarkable pedigree. While completely redone and expanded for the current market, two predecessors had shown themselves to be highly effective in reducing losses in production and profits in two previous recessions. An excellent flier and envelope were prepared and mailed widely to selected firms in our industry. Broadly speaking, the product died.
Multiple impact is needed to establish a product and two months later, a repeat mailing was done. Again, sales were weak. Six months ago, a third revised mailing was done. Articles were written, highly favorable reviews published. More losses were sustained. Few sales were achieved.
Yet recently, things significantly changed. Beginning with the October financial meltdown and increasing dramatically post-Presidential election and with no further attempt at promoting Turbulent Times!, the phones have been buzzing. CD sets have been, if not flying off the shelves, at least walking very briskly. The order department is busy with no sign of a slowdown.
So what?
So what does this mean? What lies before us?
For starters, it means that our industry is slow to react, the last to really feel a recession. Most firms actually had a pretty decent 2008 cumulatively. That has changed, and recent economic events have further eroded confidence and production.
Is this a valid industry conclusion? Indeed it is.
Here are the facts.
There have been 10 post-World War II recessions. This one actually started in the third quarter of 2007, with an actual contraction of the economy. (Despite hyperventilating claims to the contrary, the economy actually grew by a decent 2.8% in the second quarter of 2008.)
This means that we are now six months into a recession. If this is an average slump, we have at least another bad quarter ahead. Most, however, believe this will be a far longer-than-average downturn. Based on a severe fourth-quarter contraction, this seems quite likely.
It may seem to some that based on this, only a few bad quarters lie before us. This is a false assumption. Just as recruiting firms are the last to feel a recession, so are they the last to recover. In our business, unlike what you have heard from Yogi Berra, it isn’t over until well after it’s over. Profit-starved companies, having survived a downturn, must get to the point of having existing staff actually over-worked before expanding. This will take a good while after business recovers for them.
To cite an extreme example, it was 35 months after the end of the ’91-’92 recession before employment returned to pre-recession levels. A lag of well over a year is normal.
The long-term labor shortage which so benefits us is, as Paul Hawkinson has written, “systemic, not economic.”
There will be an end of to this — there will be a recovery. There will even be a boom market.
But in 2009? Not likely.