As we embark on the new year, marketing managers and project leads will determine their strategy for the first quarter based on the big question, "Are we in a recession?".
Typically, a recession is considered two consecutive quarters of negative gross domestic product (GDP). The U.S. entered a recession in the Summer of 2022, but according to the Bureau of Economic Analysis, GDP actually grew slightly at 2.6% in Q3.
So while we can't fully confirm that we're going to be in one again, we know that your marketing team is looking to you for answers. In this article, we'll provide industry insight into the current state of the economy and best practices for marketing leaders to better address employee concerns.
Are We in a Recession?: Marketing Leaders and Data Weigh In
To see what brands think about the current economy, we used Glimpse to survey 300+ U.S. marketers to ask them if they think we’ve entered a recession in detail.
1. Do you think the U.S. economy is in a recession?
Marketers overwhelmingly (78%) say the U.S. is currently in a recession. This comes as no surprise as many marketers are already adapting strategies in response to changing consumer spending habits. Let's go through some of the sentiments behind their answers.
Reasons Why We Might Be in a Recession
- Consumers are spending less and exercising more caution and discretion.
People are spending less because they don't know how long the recession will last. As a result, they pay less for products or services. They're focusing on using their money for sustainability over risks and are spending less on nonessential goods.
- Inflation has made everything more expensive for marketers and consumers.
In plain terms, higher prices make it harder to make ends meet. Instead of shopping for the latest, innovative tech, many have to delay payments, purchases, and planning. After all, no one wants to spend money when gas and food are priced so high.
- Marketers are struggling with their budgets — and 37% have already seen budget cuts.
Consumers aren't spending as much, and in response, many businesses' marketing budgets are shrinking. This limits the projects marketers can conduct and impacts how many and what type of marketing activities they can do. One survey respondent even said, "We're needing to spend more to get similar results from six months ago."
2. Do you expect the U.S. economy to be in a recession in the next three to six months?
Most (67%) marketers expect the recession to last over six months, and one-third expect it to last more than a year if we break down the stats even further.
One of the respondents left a resounding statement summarizing this prediction better than we could've put it ourselves. "Between COVID-19 uncertainty, high prices due to inflation, supply chain and venue availability issues, people are hesitant to plan large events for the next 12 months. I expect that will continue at least for another year or until there is some sense of stability in the market."
The first year of the pandemic was the shortest recorded recession on record. Many wonder how our economic path may look, so we also asked how they think a recession now would compare.
Marketers expect the impact of the recession to be on par or worse than COVID.
One-third of marketers say the recession will have a more significant impact than COVID, while another-third expect the effects to be about the same. It's an ongoing debate that only the Federal Reserve can speak to. Still, according to recent financial news, the trend for economic growth is projected to be negative in the first quarter of 2023.
Financial figureheads such as Jamie Dimon, Chief Executive of JP Morgan Chase, shared in an interview with CNBC that consumers and companies are in good shape, but that trend "may not last much longer as the economy slows down and inflation erodes consumer spending power."
How to Navigate Uncertainty as a Marketing Manager or Project Lead
1. Take steps to recession-proof your business.
Learning how to recession-proof your organization takes time. It requires leaders to take a step back and think creatively about how they approach business. Some actions you can take include sales forecasting, fostering stronger business relationships, or diversifying your revenue streams.
2. Lead with transparency.
Your team may already be aware of economic uncertainties, but it's your job to ensure they know how it could impact their jobs. Amidst uncertainty, the best thing you can do as a leader is to openly share information and manage expectations — so none of your employees panic or wind up blindsided
Business.com has even identified a link between transparency and morale, citing that increased transparency can improve employee morale, boost retention, and create a better bottom line for your company.
3. Reduce spending where you can, but not to your detriment.
Rethinking your budget is smart, but you still want to empower your marketing team to do impactful work. Look at your systems and processes and determine which ones add the most value to your team's objectives. You might even identify redundancies and save time and spend.
4. Keep benefits that your employees rely on the most.
Cutting frivolous employee perks and benefits is an agreeable — if uncomfortable — course for leadership to take in times of uncertainty. The benefits to keep should be essential to your company's compensation philosophy. And don't take away too many, like healthcare or time off — you don't want to risk losing talent because their priorities aren't being met anymore.
Are we headed for a recession?
As marketers, we're not experts in financial markets and shouldn't be a source for investment, HR, and legal advice.
It's not our call to make, but for 2023 — regardless if we're officially in a recession — we advise that marketing managers and project leaders stay vigilant and expect the unexpected. Have a game plan to present your team and prepare for uncertainty.
