Robert A. Flutie

The “R” word is back. It’s been a while, but the suggestion of a recession reared it’s ugly head several months ago. Our most recent brush with a recession started as a “suggested” recession. Then it became a “possible” recession. We progressed to “It’s looking like we can have” a recession. Most recently, we began to hear how “inevitable” it is that we will have a recession. Low and behold, on Friday well respected economists, analysts and Wall Street Moguls we were advised that we are now “in” the recession. I’m a bit disappointed that this recession snuck up on us. I had the silly string and party poppers ready.

It’s not my intention to make light of our country’s economic woe. Like most Americans, I am frustrated and uneasy about the financial markets roller coaster ride. I’m also irked by the Federal Reserve Bank’s passive aggressive attitude about their role in the economic stability of our country. I listened to Chairman Bernake as he extolled the most recent Federal Reserves “observation” of the capital market, I could not help but think “hey, didn’t you guys (in part), help cause the recession?” I went through my notes and came across an 2005 editorial piece that warned us about how Bernake was more aligned as a Bush economist than former Chairman Greenspan. Hayley Block had greater insight on where things were our economy was possibly heading than the a real life Alison Dubois

In any event, this blog is not intended to be a Cliffs Notes version on Keynesian economy.

Unemployment is up which means that inflation should hold at bay. That’s the good news. The not so great news is that in the months ahead, more people will be losing their jobs. In the entertainment community we have the luxury of pointing a finger at the WGA strike. Sony has released writers who have “overall deals” and WB has warned of impending layoffs. Major Hollywood agencies are cutting staff, putting staff on “strike” pay and simply downsizing. The amount of TV and Film projects was already on the decline and now there are exponentially less projects being produced.

Now we have the sentiment that the consumer is spending less money as a an addition to the already tumultuous entertainment landscape. The less that Mr. and Mrs. Jones from Peoria spend on non-essential goods and services, the less money that makes its way to the corporate titans that control marketing and advertising dollars.

In the current business environment, the “wealth” of the business sector (both Fortune 500 companies and mom and pop shop’s), is receding and for a business sector that relies so heavily on advertising dollars to fuel the “middle” segment of the networks who pay studios and producers to create TV and FILM projects the outcome is easy to predict. There simply will be a shortage of new project. To further exacerbate the situation, the projects that will be produced will carry lighter budgets. All in all, less people working and less money will be maid by people who are working.

It’s important to remember that networks are owned, or a part of a multi-faceted major corporation. NBC is owned by GE, FOX is owned by News Corp, ABC is Disney and CBS is Viacom. All of these companies are motivated and driven by profits. And when it comes to the simple math, it’s easy to see why a decrease in spending by the consumer, causes a decrease in marketing dollars, which results in less money being spent on the development and production of TV shows.

While it may be true that there will be less production to keep us entertained, we can rest comfortably knowing that we can always tune into MSNBC to watch the sparks fly on Wall Street.

* FLUTIE *

This entry was posted on Monday, January 14th, 2008 at 7:11 am and is filed under Federal Reserve, Finance, Uncategorized, advertising, economics, marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.