When the U.S. catches cold, must the rest of world sneeze?

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The schadenfreude has abated. As the U.S. downturn takes hold, the global advertising community is now watching with a mixture of bemusement and panic, fearful a full recession might creep inexorably across the globe.

History suggests many people won't accept that recession has struck until at the very least the formal definition of two successive quarters of negative growth (that wonderfully slippery phrase) has been fulfilled. Or, more likely, until they lose their jobs.

Asia's ad industry experienced a quarter of a century of continuous growth until 1997. It then watched the Tiger economies fall apart with open-mouthed paralysis. Some argue that the reason that much of the region, notably Japan, has struggled to re-emerge from the doldrums is that it has not addressed many of the problems of corporate flabbiness (overstaffing) and lack of individual entrepreneurial spirit that are the inevitable by-product of continuous growth coupled with a paternalistic state.

Globally, the pain of the Asian collapse was eased because it coincided with an unprecedented American boom. But it would be wrong to look at that collective inertia and contrast it oversimplistically with the swift defensive measures and corporate browbeating now the new norm in the U.S.

The truth is that under-35s working in the U.S. ad business have never known what it was like to work in bad times. You will have forgotten the old adage that the value of your investments can go down as well as up, and be heavily addicted to your annual bonus. You will have renounced savings for the Nasdaq, and seen the investment pay off more handsomely than your parents' generation could ever dream of.

The idea of only 4% to 6% growth may unsettle you, whereas in much of the world it may seem pretty satisfactory. In continental Europe, where the state intervenes to support ailing industries in a manner that makes Detroit weep, the sudden, draconian, widespread layoffs anywhere from DaimlerChrysler to Lucent would be politically unacceptable. However, given the current air of mild panic in New York, Detroit and San Francisco, odds are the rest of the world will be unsettled soon enough.

This includes the buoyant U.K., spiritual home of boom-bust cycles; a market where you can gauge the chronology of national recession by analyzing total ad-industry staffing levels. When America catches cold, Britain sneezes, such is its influence on the U.K. economy. Although the public face of the U.K. is healthy, and despite a belief America has somehow "talked itself into recession," the first sniffles are detectable in London.

There has been a serious decrease in the value of TV air time sold in the first quarter over last year. Although there are other influencing factors-none, of course, related to the basic truth that air time is too expensive-the TV barons and their print peers are busy revising forecasts downwards. Actually, the British suffer from a different malaise: They never quite realize a recession is over until the next one is looming. It suits the national psyche.

Lest this all seem too depressing, there is a major consolation for non-U.S. observers: The underlying strength of the U.S. economy, coupled with the fast action taken by the incoming Bush administration, Alan Green-span, and some of the country's corporate behemoths, plus the indomitably optimistic U.S. spirit, make it unlikely that a downturn will last long enough to spiral into recession. Small comfort if you've already been "downsized," but better news for potential indirect victims in Hong Kong or Munich. The rest of the world may not fully understand the downturn, and particularly the speed with which it's gripped America, but that is not to say that it will, or can, ignore it.

Stefano Hatfield is managing director and editorial director of Ad Age Global.

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