NRF Chief Economist Said Recession Unlikely
The National Retail Federation is a strong authority on retail growth and consumer spending. In February, their chief economist, Jack Kleinhenz, said in a press release that some households might feel recession-like conditions but that a widespread downturn is unlikely.
The reason for the optimism is data points showcasing the economy’s resilience, including growth in retail sales, decreased inflation and a strong job market. The NRF did report retail sales growth in February.
Another study revealed that Gen Z is the least likely generation to reduce spending amid inflation. If that’s a key demographic for advertisers, be sure to advise of this.
The message here (from the experts) is that the economy isn’t as shaky as some think. These economists know the signs of a recession, and they aren’t seeing them. Things could always change, so continue to look at retail spending figures and consumer confidence. You can share this with advertisers and then bring it down to the macro level of what’s happening in your area in terms of growth or decline.
Also, remind businesses that continuing to advertise keeps them visible and top of mind. It could also help them win market share should their competitors cut ads.
Lots of Jobs Still Available
Thus far, in 2023, the economy has added 828,000 jobs with an unemployment rate of 3.6%. There have been layoffs this year, mainly concentrated within big tech. However, reports show that small, private companies are increasing their headcount. For example, the number of open jobs for businesses with fewer than 50 employees rose by 85% from 2020 to 2022. Many in this category are new companies opened in the past few years as barriers to entry fell. The Census Bureau labels these “high propensity,” meaning they are more likely to grow and add employees.
Other industries are still in desperate need of workers. Nursing shortages are extremely high. Construction and trades are struggling to recruit as the demand for new construction and infrastructure projects grows. Retail, restaurants and hospitality have always had high turnover and are using many strategies to find the labor they need.
What this means for you at the local level is an opportunity to help their recruitment pipeline. Their only strategy now may be job boards, but those only capture active candidates. Recruitment digital and linear ads expand reach, enable targeting and boost visibility.
Inflation and CPI: Some Consumers Are Feeling the Pinch and Changing Buying Behaviors
Inflation has been a top economic signal for years, hitting high numbers in 2022. Some of that is easing. The Federal Reserve has been working to bring prices down, but it’s complicated. The good news is that inflation fell for the eighth straight month in February. The CPI (Consumer Price Index) sat at 6% at the end of February. The most impacted items for price hikes included food, energy and transportation. Food costs did cool a bit.
For households with less savings and earnings, inflation has affected what they spend and where they spend it. For instance, dollar stores are now the fastest-growing food retailers in the U.S. They doubled their share in rural America. That’s a significant change in buying behaviors as consumers attempt to extend their dollars further.
Changes in how people spend their money can be a great campaign theme. Businesses want to be in tune with what their customers want, so finding these kinds of trends can lead to ideas for ad messaging.
Economic Signals: Lead with Information to Ease Fears
Everyone is carefully watching what happens next in 2023. Many things are looming that create fear and uncertainty. The economy will always be a consideration in what companies spend on advertising. Remember to stay informed at the local level, as that is what matters most to your clients.
Get more insights on the verticals with the most opportunity by reading our post on the ones to watch in 2023.