You will want to read this series if your job duties include forecasting or new product launches, if you have a P&L target to hit this year, or if you are simply confused by the daily swings in economic data.
You won’t find this topic anywhere else in the marketing world. Just more articles about Google, P&G, and Facebook (including a sad, sad story on Social Media Today about a man heralding how Facebook’s new Timeline has helped him relive THE PAST THREE MONTHS OF HIS LIFE).
Back at the beginning of October, we said this:
“Many, many months from now [October] the NBER will mark the Great Recession Part 2 as having started sometime in August or September of 2011. GDP might be slightly positive this Q4 with a holiday head fake, but it will plummet again in January.”
Ironically, the S&P 500 fell nearly 3% by the end of that day, finishing a two-month nearly 20% drop, and moving straight up ever since.
However, the real economic data since October has been anything but a bull market. Results have been all over the lot, spun positively in all cases – witness how often Reuters has used the term “unexpected drop,” for example.
Fourth-quarter GDP was 3%, hardly a recessionary number – yet two-thirds of it was driven by businesses foolishly increasing their inventories. Weekly unemployment claims are analyzed like tea leaves – yet they vary by no more than 1% each period. We add 200,000-plus jobs each month – yet no one can explain how the unemployment rate drops 0.5 percentage points as a result one month, then doesn't change at all the next month.
Back in October, we were troubled by the outlook for housing, employment, credit availability, government financing, and Europe. We were troubled, as well, that no one - no one - in the marketng trade was talking about any of it. None of the issues, not even the so-called resolution to Greece, are put to bed.
Let’s start with housing, a near-20% direct contributor to GDP. From yesterday’s news:
“Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002…prices were down 3.8% from 12 months earlier, according to the S&P/Case-Shiller index.” Still. No. Bottom.
One of every five homes in the U.S. is “underwater.” Millions are still to make their way through the foreclosure process. Mortgage applications are at a seven-month low. And there are no new jobs in residential construction.