Why the PR Industry Could Be the Canary in the Economic Coal Mine
Most of us are asking ourselves which way is up in the whipsawing economic maelstrom of the Trump administration.
Having a directional idea of where the economy is heading clearly matters for planning and critical business decisions. But we simply do not know what the president will say, or which policies or tariffs will or will not be implemented on a day-to-day basis. As we learned during Trump 1.0, it would be foolish to expect that to change.
While we cannot definitively predict the future, communications leaders will be thinking about potential scenarios, especially the risk of a recession and all that may entail.
One challenge is the mixed messages of key economic indicators:
The March jobs report seemed solid – but a closer look reveals that cuts to government employees were barely reflected.
The last inflation numbers were positive – but there is a significant push and pull going on between tariffs driving prices higher and the downward pricing pressure of basement-level consumer confidence.
Upcoming consumer spending data is likely to reflect the impact of pre-tariff purchases of cars and other consumer goods at the same time as consumers are tightening their wallets.
It’s going to take a few more months to get a clearer sense of the economy’s direction. In the meantime, clients’ willingness to spend on PR-related activities will be a key litmus test not only for their economic outlook, but the perceived risk of executing programs in the current environment.
The PR industry has successfully weathered storms in the past not only because communications has remained a priority, but because the industry has been able to adapt and pursue new ways to add value. But this doesn’t mean that agencies or corporate communications departments are immune to slower economic growth and tighter budgets.
Having worked as a corporate communications and agency leader, I know firsthand how quickly companies can pull the plug when the message comes from the top to cut discretionary budgets or simply hold off on making commitments. Hunkering down is a tried-and-true strategy, one that doesn’t help those trying to push new business or programs over the line. It’s always bad news for hiring.
While in my experience cuts to corporate communications departments are rarely the starting point for corporate trimming, if a downturn is long enough at some point the scalpel follows and budgets will be flat or reduced.
If, as many fear, we are heading into a recession (the most common definition of which is two quarters of negative GDP growth), it will take time for this to be reflected in government data. The same will be true for a more optimistic forecast to emerge.
What should the industry be doing?
The most important thing is to stay focused and leverage our communications expertise to help clients and employees manage through this period of economic uncertainty. It is an opportunity to maximize value and build reputations.
And, it is essential to think through the range of potential challenges, opportunities and outcomes for your agency or communications department. You don’t want to be the person swimming naked when the tide goes out.
