Six months ago, we talked about how most predictions were for a recession in 2023. The most recent data suggests that a recession is not inevitable and may not happen at all.
What is a recession, after all?
The rule of thumb is for two consecutive quarters of negative GDP to qualify as a recession. Other economists look at non-farm payrolls, industrial production, and retail sales.
Today’s outlook is very different. Goldman Sachs now forecasts only a 25% chance of recession in the next year, down from 35% six months ago. Estimates for GDP growth for the current quarter were revised up to +2.2%, comparable to 2nd quarter’s 2.4% growth. And the jobs numbers continue to be strong, which supports consumer spending. The Bureau of Labor Statistics reported that the economy added 187,00 new jobs during August (the 32nd consecutive month with job growth) with the unemployment rate at 3.8%, up slightly (0.1 ppt) over the past year. The service economy is growing since consumers are traveling, shopping, and dining out, versus buying goods where today’s higher interest rates are a factor. And inflation has been trending down to roughly 3% above last year.
Good news for most of us!
With a stronger economy, we can consider being a bit more aggressive over the next 6 – 12 months with growth plans and marketing investments to stimulate sales and improve market shares.
You may have hit the “pause” button earlier this year to see how things developed. Being too conservative now may be a risk since your competitors are likely to also spend more. If you have growth plans ready to go and were just waiting for the right moment, you are in luck. For everyone else, you may want an objective outside opinion on the biggest opportunities for your business. Rarely do things stay the same over the course of a year, and it is prudent to take stock prior to making major spending decisions.
First, look at what has been working versus those things that have not met expectations. Challenge your leadership team to come forward with ideas and thoughtful plans to generate revenue growth AND a positive ROI. For many industries and product categories, lead times are long, so short term boosts to sales may be harder to come by. But if you can accelerate a product launch or a new feature or formulation, go after those initiatives with vigor. Quick implementation may be especially challenging if you were forced to trim headcount during the past year to reduce costs.
This may not be the time to swing for the fences, as singles and doubles get things going again. Line extensions or new flavors tend to be lower risk initiatives that build incremental volume. Another idea is to identify those markets where there is high category consumption, but where your business is slightly underdeveloped. Concentrating your efforts in those markets often is a solid strategy.
If you are in a position where you do not have available funds to invest in growth, map out your base forecast. And then calculate the incremental sales and profit from new products or programs. You may find that there are ways to get growth that pays for itself. Consider promotions structured to move unit volume or tonnage, for a quick boost to revenues.
With internal resources potentially constrained, this is a good time to lean on agency partners. Agencies can supplement your team and drive alignment and consensus around a go-forward plan that has the highest potential for success.
At Damen Jackson, we thrive on helping clients reinvigorate and revitalize growth muscles that may have atrophied a bit. We are here to be your partner, your conscience, your devil’s advocate. And we will always bring the conversation back to strategy. Who is your primary target audience going forward? How does your product meet and exceed their needs? How do we maximize the market opportunity and optimize return on investment?
Importantly, we are pragmatic, focused, and energetic. We get assignments done well, and quickly.
Take the first step to a more successful business today.
1. CLICK HERE to schedule a free 30-minute discussion. No pressure – we promise.
2. We’ll provide real-world case studies showing the process in action.
3. If we’re a fit, we finalize details and get started.