Supposedly when bad economic times are coming, the sex industry is one of the first industries to see their business drop because its one of the first things people stop spending money on when bad times are coming.
Are there other industries that are like this? I’ve heard RV sales are also a bellwether, but aren’t a lot of RV sales to retirees? Or do they stop buying because they expect a drop in their retirement funds.
Any other industries? What about things like restaurant home delivery services? Do people stop using things like doordash and start picking things up at the restaurant instead?
In 30+ years of commuting via public transit in Chicago and the suburbs, outdoor advertising is one that I have seen as a clear sign that the economy is softening.
I’ve noticed that, when the economy starts to soften, the ads in stations and on trains are left up longer (because there aren’t as many new ads to take their places), and ads for particular events (TV shows, movies, concerts) stay up for weeks or months after they occurred.
I have heard that steakhouses and other upscale restaurants often experience an upswing of business during economic slumps.
Apparently when there’s an economic slump, people put off spending money on major luxuries like a vacation, a boat, a car, etc. But because people aren’t buying these major luxuries, they become more likely to buy minor luxuries like a night out at an upscale restaurant.
Not sure if the military is an “industry,” but I had always read that enlistment rises steeply in a recession, and that military recruiters consider a recession to be the best time for their job.
The Index of Leading Indicators is worth a mention. Here’s the current report, updated monthly:
Realize though that the index is decades old and that economists aren’t especially skilled at forecasting or even nowcasting recession. It is reasonable to speak qualitatively of headwinds and tailwinds. Bill McBride at Calculated Risk:
Current nowcasts of Q1 GDP range from shrinkage to very modest economic growth.
I was coming in to say ‘advertising/marketing’. It’s the industry I work in, and it’s the first budget that companies look to cut when they’re trying to tread cautiously and limit unnecessary spending. Of course, there’s a whole argument there about whether that’s actually a good idea, but finance directors see it as easy pickings. They don’t seem to connect the dots between sales drops and reduced marketing activity.
Absolutely so. I’ve been in advertising for most of the last 25 years, and I’ve lived through this cycle several times.
Most companies will cut “external” costs like advertising first, before they start cutting internal costs (i.e., layoffs, project cancellations, etc.). It makes advertising agencies the canary in the coal mine, and they’re often the first ones (in the white-collar space) to make layoffs.
Every time the economy starts to downturn, ad agencies pull out the studies that show that companies which maintain marketing spending through a recession (rather than cutting) emerge on the other side of the downturn in a stronger place. It never matters.
Preach. I don’t know what’s it’s like in the US right now, but we’re seeing it in the UK. My agency is doing ok thanks to some major clients who are marketing-first in their ethos. Others, not so fortunate. I’m hearing of layoffs every week.
From what I’ve seen, US companies started getting conservative about their spending in the lead-up to last fall’s election. Everything that’s happened since then has them getting more cautious, not less.
Well yeah; if you’re halfway competent, you have virtually no risk of being laid off, and you get a lot of other benefits in the bargain, like healthcare, food, job training, etc.
It would seem to be a pretty good deal for any young-ish person who doesn’t have a solid career path laid out in front of them.
Two specific moments in my career were when Iraq invaded Kuwait and 9/11. Both times clients slashed their budgets so much that my agencies had to do substantial layoffs, and kept those budgets slashed long after the rest of the economy was back on solid ground. By contrast, the Recession of 2008 seemed to hit all sectors at once, and the recovery also seemed to be across the board.
Way back in the day I started my career as a drafter in aluminum can manufacturing. I worked at Ball, who later bought Reynolds Aluminum, but I also worked for Coors, Metal Container, Crown Cork and Seal, and others. It was a really terrible 5 years of my life.
But one thing I learned is you can very much judge the state of the market based on the sales of aluminum cans. People always drink beer. It doesn’t matter how bad their life is, there is always money for beer. When times are bad, they buy beer in cans. Good times, micro brews and bottled beer. If the aluminum can market starts moving up, the general economy is moving down. I fucking guarantee it.
I work in the supermarket industry. We did very well in the 2008-9 recession as food at home gained “share of wallet” from food away from home (restaurants).
The gain from more people buying more groceries rather than eating out more than offsets the losses from some people ending up in food pantries and others becoming more price sensitive and buying more items on sale.
The impact of lower income people (including laid off folks) losing purchasing power is tempered by increasing “food stamp” issuance, which makes food at home even cheaper in relation to eating out.
We fired our corporate economist during the first Trump administration for saying that the majority of people were more “constrained” than they were in the previous eight years. We just fired our economist again after he gave a negative outlook in January.
The moving industry. There is often a sharp decline in household move scheduling months before an economic downturn and businesses moving office just falls off a cliff before things get bad generally.