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Is a Recession in Session? How do Recessions Impact Businesses?


What is a recession and how do we know we’re heading towards one?


A recession is negative GDP growth spanning at least two quarters and results from economic struggles that include higher unemployment and company decreases in sales. The U.S. has gone through four recessions within the past thirty years. While there are many causes of a recession, it’s hard to pinpoint exactly when a recession will happen or if the nation is currently in one now due to varying parameters.


It’s difficult to find any two research articles that will have the same opinion of if or when we will reach a burdensome downturn, but some warning signs are currently present, such as: a sudden economic shock (COVID-19 pandemic), excessive debt (U.S. Federal debt to GDP ratio is around 129%, which the worst ratio in the U.S. to date but not in the world), asset bubbles (real estate/housing bubble repeat), too much inflation (across most sectors), and technological changes (AI and robots may eliminate jobs).


How should businesses and organizations prepare for a recession?


Individuals working in PR and marketing for the past couple of years have most likely heard whispers of recession. Is Communications Lab concerned for our clients? Not at all. Communications LAB survived the 2020 recession with our clients and was recently celebrated as the fastest growing PR firm in 2022’s Orange County Business Journal. That’s because Comm LAB is well versed in what a business must do to overcome challenges, and we believe wholeheartedly in our client’s mission statements.


During a recession, some businesses may choose to cut back on costs. Most research articles indicate that decreasing allocated costs toward marketing isn’t wise. Businesses and organizations need to keep their presence amongst their target audiences and communities, not pull back. The COVID pandemic has shown that businesses without an adaptable marketing strategy to remain in conversations have suffered. For example, some of our clients who depended on in-person public outreach initiatives for messaging were advised to implement virtual events to accommodate their audiences who didn’t feel comfortable with in-person meetings. Others have invested and prioritized updating their website for ease of use and better user experience. Our clients have also taken a more empathetic approach in their messaging, truly trying to understand and accommodate those affected by so many drastic changes in school, work, social lives, and roles at home.


There may be declines in consumer confidence and engagement while in a recession. As many of our clients are public organizations and are not dependent on sales per say, we must be the ones to reach out and show that we are still listening and that what we are doing will have positive impacts.