Just a heads-up: Merrill Lynch is now forecasting the first consumer recession in 17 years – that’s right, since 1990. Another analyst gives 50/50 odds that we’ll see a recession in 2008.
Let’s put this in perspective: over 40,000 workers have lost their jobs at mortgage lenders since January. Over half of those lost their jobs this MONTH. Around 10,000 of those folks lost their jobs in the last WEEK (per data from Challenger, Gray & Christmas). Nearly 20,000 construction workers have been laid off and the total number of realtors has declined for the first time in ten years.
These job losses are approaching the level of post-9/11 airline layoffs. Many of you probably have painful memories of that slowdown.
You may wondering what a recession really is. It’s a significant slowdown in economic activity. Out here in the real world that means higher unemployment and lower consumer spending, especially on discretionary services….many of which are health and wellness-related.
The severity of this economic slowdown will depend on three factors entirely outside your control:
1) how quickly banks start lending again to home buyers and businesses
2) whether the housing collapse (record foreclosure rates, record mortgage delinquencies, record mortgage bank failures) continues to get worse
3) whether people stop or reduce spending as a result of much tighter credit and dropping home values (which make it harder to take out cash through home equity loans).
I can’t emphasize enough the importance of doing some contingency planning now. How vulnerable is your wellness business to this kind of slowdown? Do you have rainy day funds and enough of a cash cushion to withstand any negative impact? Which employers in your community are likeliest to lay employees off or stop spending on your programs? Should you revisit your mix of products and services to make sure you’ve got more budget-friendly options available for loyal customers who’re feeling pinched financially?
At the same time, the stress of these events creates opportunities for wellness programs and services focused on helping clients learn and practice healthy ways to deal with stress. Consider partnering with other professionals to extend your reach to potential customers – psychological counselors, bankers, real estate agents, tax advisors, financial planners, for example.
If these developments have you worried, I think you’re smart, not paranoid. Feel feel to post your thoughts (we won’t display your email address) or email me directly at firstname.lastname@example.org.