Media Buyers Get Jitters About Possible Recession
November 9, 2007 12:59 PM
Federal Reserve chairman Ben Bernanke spooked everyone yesterday when he said he expects U.S. economic growth to slow noticeably over the next several months as more bad news emerged from housing, energy, the weakening dollar and low retail sales.
And despite all the bad news Bernanke said that the Federal Reserve does not expect to cut interest rates again during its December 11 policy meeting. The Fed had already cut rates twice in September and October.
The jitters are now spreading from Wall Street to Madison Avenue after agency media buying firms witnessed yet another tumultuous day in the stock market today. In other words, the dip in retail for this holiday season could result in an unexpected drop in TV ad spending.
Chew a Maalox over this nugget: This past October retail posted its lowest sales in 12 years, an ominous sign of things to come. So should the Fed drop rates again? I say yes.
Del.icio.us 
Digg 
Fark 
StumbleUpon 
Comments (4)
I say no. Lowering the interest rate makes borrowing easier, but it also hurts savers. And unless I'm reading the news wrong, didn't the subprime mortgage crisis result from borrowing that was too easy? I see the current downturn as a correction. The economy has been running on bubbles for too long; it needs to get itself back on more solid footing.
Posted by Andy S. | November 9, 2007 2:09 PM
Andy,
Yes, the subprime made buying too easy. But by and large that's been corrected, the problem, but the fallout from that snaffu is affecting all sectors. Take a look at tech. Not good. Not good for retail.Take a look at the dollar. This country is doing something wrong. China is the tail wagging the dog right now. Not the U.S. There are fundamental problems here beyond the subprime fallout.
I think what we have witnessed is far more than a correction. It's a strong perception of lack of confidence. Perception goes a long way, unfortunately.
Thanks for the post,
Marianne
Posted by Marianne Paskowski | November 9, 2007 2:16 PM
Perception? Lack of confidence?
Why WOULDN'T there be lack of confidence? the Fed lowered the rates SO low that everyone could get a loan, and THEN turned around and killed the mortgage interest write-offs for tax payers! Perception might be the reality here!
The refi boom was another grand plan to line the pockets of the Fed. What is there for the consumer to be confident in?
Posted by doriandi | November 27, 2007 9:20 AM
doriandi,
I agree with you. This headline from today is even worse. The market resounded on the news this morning that some Arabic country would bail out one of the big banks with an infusion of billions of dollars.
Kind of creepy,
Marianne
Posted by Marianne Paskowski | November 27, 2007 12:31 PM