What if they gave an economic recovery and nobody came? Although some key measures of the economy show steady albeit numbingly unspectacular growth, consumers and businesses continue to behave in ways more characteristic of a recession. The chart you see here, produced by Cahners Economics in conjunction with its Cahners Business Index, reflects the conviction among a majority of executives on Cahners' business-confidence panel that spending cuts--not sales increases-are still the way to make the bottom line come out right. Obviously, that's not the sort of news ad agencies are looking to hear. "We're now two-and-a-half years into the economic expansion, and reports of corporate downsizing are continuing to surface," says Cahners' summary of its findings. "Many businesses report that attention to cost controls is an affirmative strategy to meet profit targets, rather than a defensive strategy to weather difficult times." The Business Confidence Index remained modestly on the plus side last month, but that's merely where it has been for the past five months--which could indicate a "maturing" of the recovery, even as many people refuse to believe there's been a recovery. "Maturing' would mean that peak growth rates for this cycle are behind us; growth rates should stabilize for a period before beginning to slack off a bit later next year." Slack off?. Yikes!
Copyright Adweek L.P. (1993)