Thought Leadership

Hitting the Mark: What Marketers Can Learn from the Recession that Never Came


Mark Penn

As the year comes to an end, it’s time for business leaders to take stock and realize the recession many of us feared this year did not hit. In fact, with consumers still spending healthily and sitting on lots of disposable income, now marks a bigger marketing opportunity than ever. In the December 2023 edition of Hitting the Mark originally published in Barron’s – I share what leaders need to learn from the recession that never came.

As always, if you have questions or comments, please reach out to me.

Companies Cut Marketing as If a Recession Was Coming. It Didn’t.

Fears of a recession drove too many companies’ executive decisions this year. They hunkered down and cut marketing spending and maybe digital innovation, too. Then the news came that there was no recession—in fact consumers were spending on all sorts of consumables. Companies that bet on recession lost out.

The old, trusted brands faced little competition, since their nemeses pulled back. Consumers turned to familiar faces, and so the big companies pocketed market-share gains. Those chief financial officer-driven orders looked good on paper—in reality they cost businesses tremendously. Consumer timing outside of a recession is as impossible as stock market timing. Consumers often defy logic and expectations – and this year they were spending.

Pulling back wasn’t entirely irrational. This time last year just about everyone was scared of a looming recession. Reuters polled economists in Oct. 2022 and found 65% thought a recession would occur within the next year. In Dec. 2022, 80% of Americans thought the country was either already in a recession or would be in the following year, according to the Harvard CAPS/Harris poll.

But the recession never came. After steady growth all year the economy grew by 4.9% in the third quarter of 2023, driven primarily by consumers. Consumer spending increased 4% for the quarter and was responsible for 2.7 percentage points of the total GDP increase—signs of a strong economy.

Consumers Keep Spending…and Spending

Consumers turned out to have more money to spend than ever. Thanks to Covid-era stimulus bills and shutdowns, median net worth rose 37% from 2019 to 2022. Americans still have an estimated extra $1.7 trillion in savings. Even in the third quarter of 2023, disposable net income grew 3.8%, nearly triple what economists were forecasting. With the economy mostly returning to a post-pandemic normal, consumers are eager to spend on experiences.

Consumers went on a shopping spree this summer. Spending at movie theaters, restaurants, sporting events, and casinos all rose in August. Spending on international travel and airline transportation shot up in September. Overall last quarter, the consumer spending increase was spread almost evenly across goods and services.

It’s not just wealthy consumers who are opening their wallets. Retail sales have risen six months in a row. The holiday season is already off to a good start. Online spending for Black Friday was up 7.5% this year, according to Adobe. That’s right in line with a forecast of 7-9% for e-commerce holiday sales growth this year. Overall holiday season sales are estimated to rise 3-4%, less than the pandemic years, but that’s still a healthy increase.

The Challenger Imperative

So challenger companies that pulled back on spending wasted a whole year not getting their name out there and putting up a fight for new customers. Smaller brands suffer disproportionately when everyone cuts their marketing budgets. People will fall back on what they know rather than try new, unfamiliar things.

Companies need to recognize their mistake of pulling back in fear of the recession that wasn’t. The lesson for 2024 is to resist that fear again and think twice about cutting back on marketing and other engines of growth. Consumers are still sitting on lots of disposable income and the percentage of Americans who think the country will avoid a recession entirely has nearly doubled in the past twelve months. The Fed is holding rates steady and is hopefully done with its policy of economic blood-letting.

The established companies want the upstarts to keep doing nothing and giving away market share for free, but challengers must keep their foot on the gas pedal. They have even more ground to make up after this lost year. The recession never came, but the consequences were real and serious. Hopefully those trying to predict consumer trends will learn the lesson that many stock-market timers have learned—you pull back from advancing in the marketplace at your own peril.

Until next time,

Mark Penn




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