NEW YORK (AdAge.com) -- Despite the passage of a massive bailout package, consumer confidence isn't likely to rebound anytime soon.
The major stock indexes closed at their lowest levels in years, despite the bailout news, which came in the final hours of trading Oct. 3. The news capped a turbulent five days in the U.S. financial system, which saw the Dow Jones Industrial Average lose 7%, or 814 points.
Marketing-industry executives said the rescue bill could provide some stability, but spending, whether it be consumer spending or advertising spending, will likely remain under pressure. Here's a roundup of some of their thoughts.
CEO, Innovation Interactive
"I'm not sure the plan is enough to create stability from the doldrums we've been in. It's a good step; I'm not sure it's quite enough. Conversion rates are holding steady but the consumer has less money to spend. If the average customer was spending $250 or $300 -- they're spending $200 this year. In general these are the right steps, but it just takes time for advertising to start feeling the effects. The first and second quarters are going to be the telltale signs for 2009 -- we are waiting for those budgets to come out in the next couple of months."
American Suzuki Motor Corp.:
"There's enough [consumer] fear out there that I don't think we'll see an immediate return to business as usual."
Senior VP-Director of Ideas and Innovation, Mullen:
"May be too little too late. The market was not inspired."
Global President, Rapp:
"I suspect it will be a long time before consumer confidence returns to the levels we've seen in the years leading up to the current slowdown.
So any extent to which this bill improves consumer confidence is a good thing because the shock of recent events has undoubtedly discouraged sales that might otherwise have happened."
Chief Creative Officer, Wunderman:
"Nobody knows what's going to happen next [because] we've never been here before. People are searching for analogies and similar situations and in all honesty I don't think there are any."
Chief Economist, Distilled Spirits Council of the United States:
"Yes, it's passed, but you're still seeing a lot of consumers who keep seeing the price of their homes drop. ... Our growth rate isn't as fast as it once was, we've seen a shift from on-premise consumption toward at-home entertaining [lately]. I think most consumers will take a wait-and-see approach because this is, after all, just the first attempt to fix a problem that goes back 10 years or so."
Senior Director, Fitch Ratings:
"The economy, consumer spending and media spending will likely still be under pressure with the bailout. Without it, the outlook would likely be even worse. To take it a step deeper, the subsectors that were negatively affected before or seeing pressure before the credit crisis are likely to continue to feel as much or more pressure going forward. We would expect most of the local media–newspapers, radio, Yellow Pages -- and probably magazines to be negatively affected by the economic downturn through 2009 and likely into 2010."
President, Weber Shandwick:
"The signing of the rescue package should provide some sense of stability, but it's unlikely that it will boost consumer confidence in an appreciable way in the short term. I think we'll continue to see some difficult economic conditions in the U.S. and in markets around the world, though we continue to see good growth rates in the public relations sector as companies focus on reputational issues and in more cost-efficient ways of reaching consumers."
Exec VP, Technomic:
"Any economic-bailout package is going to have a positive effect on the consumer and the restaurant industry, so it definitely will help to increase consumer confidence, which is a really big indicator of how the restaurant industry performs and should have a positive effect on the industry."
"This is a major correction, not a depression. Things got out of control. What goes way up must come down. That said, the bailout is a Band-Aid and a necessary evil that will temporarily free up the credit markets, potentially giving the economy a shot in the arm. It will also give a temporary psychological lift given the pervasive doom and gloom attitude in America currently, but will not fix the long-term systemic issues/problems."
Senior VP-Strategy and Insight, Initiative:
"Consumers are not going to get over their fears about the economy in one day. They won't jump back into their old behaviors until they see some concrete economic indicators that there will be a recovery."