Is the Economy Strong Enough for an Advertising Recovery?

Yes, we have heard that officially the recession ended in the summer of 2009. Yes, the stock market has been showing renewed strength over the past few weeks. Yes, even housing starts and sales are showing some recovery.

But even with that good news, why do we still believe that the advertising marketplace will only see 2 percent growth in 2010? Why do we expect only moderate growth in those advertising revenues for the next few years?

The simple answer is JOBS! Today’s announcement of a 95,000 total decrease in jobs for the month of September 2010 (and only a 64,000 increase in private employment), a full year after the recession ended, is noticeably weak. Job growth has always been a lagging indicator of the strength of the economy, but the lag feels appreciably long this time.

Moreover, the decrease in employment during this recession was so significant. According to a recent Milken Institute study, 8.4 million jobs were lost during the recent recession, 4.7 million more jobs lost than the recession of 2000-2001. So, the uncertainty surrounding this recovery rests with the remaining BIG HOLE OF JOBS that the economy must claw its way out of. And it is not just with the people who lost their jobs and have not found a substitute, but also the larger group of working people who are somewhat concerned about their own jobs as a result.

So where does this leave the advertising marketplace? Clearly, some advertisers are going to hold back until they see a recovery in the job market. Automotive advertising is already showing some strength this year, but remember that they really contracted their spending last year. Other advertisers are taking a more “wait and see” attitude, waiting till job growth is better, consumer confidence and the resulting consumer spending increases. If we see that job growth getting stronger in the next few months, then certainly advertising will follow. If we don’t, tepid advertising growth will continue.

This Post Has One Comment

  1. John White

    новости по теме ислам в мире

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