Recession 101- What Every Publisher Should Know
No one's officially said the "R" word yet, but last week, the Federal Government decreased interest rates by a surprising .5 percent, pleasing many consumers, but worrying publishers after a modest fourth quarter in 2000. Alan Greenspan, chairman of the Federal Reserve Board, admitted recently that by the end of January, he will reconvene with the Federal Open Market Committee to discuss further plans to manipulate interest rates should the effect on last week's efforts offer a stalemate. Committee research shows that higher-than-average energy prices and a decline in construction are two important factors to watch this month.
As the result of the government's attentiveness to a waning U.S. economy, several magazine naysayers are deciphering how advertising ups and downs will predict the publishing economy's future this new year. According to some recent statistics, publishers ought to be minding their P's and Q's should a recession strike the U.S. economy during first or second quarter.
Recession, both in theory and practice, is defined as a withdraw or going back—not exactly in sync with the flight of high technology in the publishing industry today. But according to recent Business Information Network reports compiled by American Business Media and Competitive Media Reporting, the good news is that advertising pages increased 6.3 percent in 2000 compared to 1999. The bad news, however, shows that after September 2000, advertising revenue barely increased by 2.5 percent. Buying during that same period increased significantly less by 8.3 percent than during early 2000 by 13.1 percent.
Of course, the ominous tell-tale signs of recession are hardly bleak, if not lukewarm. The real catch, say these economical watch-dog groups, is that the decline shows no sign of stopping during at least first quarter 2001. And while these low interest rates may offer some deals to investors and consumers interested in renewing loans and making major purchases, the publishing sector will be forced to find more creative means of seducing advertisers to bat in this high-stakes ball game. Publishers may start dedicating more time and money to Internet publishing to make up for less sales in print.