Market-Induced Whiplash

Watching the stock market plunge down then rocket up and plunge down is giving me whiplash.

After reading all of the things that one can read on the state of the economy, I have come to a modest conclusion that marketing overall will not suffer the same deep cuts that it had during the Great Recession.  Okay, so here is my prediction:  marketing will get soft, but not freeze like in 2008/2009.  And of course some areas will go into hibernation because mergers, acquisitions and spin-offs are going to be quiet for some time.

Here is my reasoning:

1. Corporate profitability has generally been high in the recovery.  So the need to preserve cash is not as great as it was during 2008 when nobody was able to borrow except for the Fed.

2. There hasn’t been the collapse of any particular sector of the economy, it is more of a malaise, a miasma, that has rolled over the economy.  In 2008 the housing market was a collapse, effecting many different sectors and large-scale layoffs.  That was like the flood after a dam burst.  This is more like a steady leak.  Therefore we should not expect to see the same tremendous urgency in cutting off marketing

3.  Many have learned the lessons that cutting off marketing usually results in both short term and long term declines relative to competitors who continue to spend.  Of course those who learned it best were the people who continued to market in the face of the downturn and they are the ones now in the best position to continue to spend on marketing.  It is a learned behavior.

In the meantime I’ve stopped following the stock market.  And my neck is going to be the better for it!

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