DMAW Annual Meeting Wrap-up
I attended the Direct Marketing Association of Washington’s (DMAW) annual meeting recently, and came away with some interesting opinions on where the US economy is heading, and how consumers will react – all critical information for direct marketers.
Anirban Basu, Chairman and Chief Executive Officer at Sage Policy Group, Inc., delivered a spirited and fascinating keynote address. He’s an economist, and took us through the ups and downs of the past few years, where we are now, and where we are going, economically speaking:
- Things are getting better – although 2011-12 showed declining growth, the IMF projects that in 2013-14, the global economy will get better; but it will be a gradual increase, and we’re not back to 2010 strength yet.
- In terms of the recession, most states are in recovery mode (as opposed to being in recession or at risk). The economies in Texas, North Dakota, and Alaska are all expanding, due to oil and natural gas prevalence in those states, and North Dakota has the highest employment growth. DC, Maryland, and Virginia are showing modest growth or slight downturns, previously protected by federal government expenditures that have been cut.
- Industrial production has been rebounding since 2009, almost back to 2007 levels, including the resurgence of the auto industry.
- We’ve seen 13 quarters of economic growth, but Q4 of 2012 saw a downturn of .1%. Factors included the wait-and-see attitude surrounding the elections, construction projects put on hold, and a reduction in defense expenditures.
- Experts expect the jobs report in January will be up; jobs were added in December, which continued the fairly steady trend dating back to July 2010. White collar, professional, and business service sectors are adding the most jobs, as well as leisure, supply-side, and manufacturing – showing that consumers are definitely spending, even if the Consumer Confidence Index has been down. Not surprisingly, newspapers/magazines and federal government jobs are down/losing jobs.
- Record-low mortgage rates have freed up consumer spending, but new-home sales aren’t up as much as existing-home sales overall, because construction has been down. Before, buyers believed that the longer they waited, the more housing prices would drop – but now, there’s more urgency to buy, with uncertainty about how long the low mortgage rates will last.
- The current economic environment: January Consumer Confidence Index (CCI) is down, Q4 GDP is down, we narrowly avoided fiscal cliff, the 3/1 sequester and 3/27 Continuing Resolution deadlines looming, Bush tax cuts lapsing, Obamacare, payroll tax cut lapsed – the resulting let’s-see-what-happens attitude slows economic progress. The primary strength of the U.S. economy right now is consumer spending. And even though CCI being down is worrisome, other indicators show consumers are still spending. If Congress can resolve the financial issues, the latter part of 2013 could be better than we think.
So what does this all mean for direct marketers? Our best strategy is to keep our supporters engaged – keep multi-channel communications going through mail/phone/online outreach. How the overall economy’s doing influences how our supporters spend their money, so we need to keep an eye on how economists’ forecasts play out.