NEWSPAPER ECONOMIST: RECESSION UNLIKELY

By: Joe Nicholson

Forecaster Predicts 5.1% Rise In Ad Revenue


Despite mounting media speculation about an economic slump,
newspaper economist Miles E. Groves called a recession unlikely
and said he was sticking by his prediction of 5.1% in newspaper
ad growth this year.

“I’m not betting on a recession. I see no basis – very, very
low probability,” said Groves, senior vice president and chief
economist of the Barry Group, a Bethesda, Md.-based newspaper-
marketing consulting firm. A recession would be more likely in
2002, he said.

“I’m cautiously holding to my 5.1% newspaper ad revenue growth”
forecast, said Groves, who also predicted last month that this
year national ad revenue would rise 12.1%; classified would climb
5.9%; and retail would inch up 1.9%.

“Clearly we’re in a slowdown,” said Groves. “I acknowledge that
there are [recession] risks out there. I’m not ready to revise my
forecast, but I just might.”

With speculation among politicians and in the media about the
risk of recession, he said, “We could talk ourselves into
recession whether [economic] principles demand it or not.

“I’m just suggesting that the Fed will respond to that slowdown
and get us up,” said Groves, who described some media speculation
about downturn risks as hype. Time magazine’s Jan. 8 cover
story featured the headline, “How to Survive the Slump.”

Groves’ prediction of Fed action was proven correct a day after
he spoke to E&P. Last Wednesday, the Federal Reserve Board
acted faster than most experts expected and cut the federal funds
rate – a key short-term interest rate – by half a
percentage point, to 6%. It also cut its mainly symbolic discount
rate by a quarter of a percentage point, to 5.75%.

A veteran newspaper advertising executive, Jay T. Zitz, also
differed with the naysayers. “I think we’re going to find 2001 to
be a plus year compared with 2000, but [with] not as high a
growth rate,” said Zitz, president and CEO of the New York-based
rep firm Newspapers First, which handles many of the nation’s
largest papers. Like Groves, Zitz spoke a day before the Fed
acted to prevent the slowdown from becoming a recession.

“This is all contingent on not having a major recession,” said
Zitz. “Your crystal ball is as good as mine. Unless something
should really trigger it, I think we’ll avoid it, but that is
always hard to say.”



Joe Nicholson (jnicholson@editorandpublisher.com)
is an associate editor covering marketing and advertising for E&P.



Copyright 2001, Editor & Publisher.

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