1. First in, last out
U.S. ad spending peaked in December 2000, three months before the recession officially started, and began to grow in May 2002, six months after the start of official recovery. The ad market generally falls first and recovers late; it's a variable expense that advertisers are quick to cut and slow to boost in uncertain times.
2. Broken record
Ad spending has seen a year-over-year increase every month since May 2002 (except for one dip in February 2003; that was because February 2002 had the one-two benefit of Olympics and Super Bowl). U.S. ad spending in 2003-$249.2 billion, estimates Universal McCann's Robert Coen-will break the $247.5 billion record of bubble year 2000. Factor in inflation, however, and 2003 still remains behind 2000.
3. The real thing
Real (after-inflation) ad spending fell 8.7% in 2001, the biggest drop since World War II. Real spending this year is up 3.7%, slightly below the 3.9% average for 1950-2003 and 3.8% for 1980-2003. Real growth next year likely will remain below the 6.5% average seen during the boom years from 1994-2000.
4. Gross ratings
U.S. ad spending this year will account for 2.27% of gross domestic product (total of all goods and services produced). That's about even with 2001 and 2002. It's down from the unsustainable 2.52% of 2000, when advertising's share of the economy was the highest since 1932. The average since 1930 is 2.09%; average since 1980 increased to 2.23%, which reflects proliferation and growth of the media market.
5. Cutting edge
Ad agency employment today is below where it stood in 1990 even as real ad spending has risen 48%. Real ad spending per agency employee rose to $1.43 million in 2003 from $930,000 in 1990. But agencies must cut more jobs and costs to deal with lower profit margins demanded by clients. It's a jobless recovery for agencies-and not the first. After the 1990-91 recession, agencies continued to reduce staffing for 38 months. The current recovery is 25 months old; since economic expansion resumed, agencies have cut 19,000 jobs.
6. Help wanted
For the overall economy, the recovery is getting a bit less jobless. Nonfarm employment has been increasing since August, and the unemployment rate has fallen to 5.9%, 1.8 points above the level when President Bush took office. Mr. Bush's employment charts look much like those of his father, who lost reelection in 1992 based largely on a sluggish economy. One year before Election Day 1992, the unemployment rate under the senior Bush was up 1.6 points from his inauguration. There are differences. Forecasts suggest the unemployment rate will fall a bit next year, whereas it rose in 1992. Job growth is the question mark. The senior Bush took the fall even though the economy added 2.6 million jobs on his watch. Under his son, the economy has lost 2.3 million jobs.
7. Bet on 2004
The chance of recession in 2004 is remote; the president is sure to do what he can to keep the economy rolling through the election. Of the nine recessions in the past 50 years, only two began during election years.
8. Watch out for 2005
Six of those nine recessions began the year after an election. Put another way, recessions began the year following six of the past 13 presidential elections.
Downturns aren't what they used to be. The most recent two recessions lasted just eight months each. The 1991-2001 expansion sailed for a record 120 months; the '80s boom went on for 92 months. The stock market came along for the ride; the 2000 peak was nearly thirteen times its 1982 level, and it's still up elevenfold.
10. The future
It was easy to get rich quick over the past two decades, but it's hard to fathom another 20-year stretch where the U.S. economy and stock market will both see such growth. Only true optimists will say that's the new norm. But even pessimists must acknowledge two facts: Over the past 50 years, real GDP has increased during 43 years and real ad spending has increased during 42 years. In any given year, growth is a far more likely bet than the depressing alternative.