- Even though the economy reported good growth last quarter we are still waiting for the investment surge and the wage gains the tax cutters promised.
- The average hourly wage paid to a key group of American workers has fallen from last year when accounting for inflation.
- The falling wages promise to exacerbate historic levels of U.S. inequality. Within the labor force, it means workers who were already making less are falling further behind
- U.S. consumers only modestly boosted their spending despite improved incomes, as year-over-year inflation posted its largest increase in over six years.
- Consumer spending accounts for more than two-thirds of U.S. economic output.
The White House was ready to pounce on the news about the growth of the economy, but like a slow ripple moving to the edge of the pond consumers are eventually going to put the brakes on spending and brands had better prepare NOW.
We are all paying more for healthcare and gas and the effect of the tariffs is going to hit wallets even more. Private label sales continue to surge and I have already seen first hand shoppers cutting back. Eventually the growing deficit, along with other poor economic policies, is going to hurt consumers. Just 37% of households think they’ll be better off 12 months from now because of the tax cuts, the New York Fed concluded. Some 47% expect no change and 16% think they will be worse off.
As a result of the tax cuts the number of companies letting workers know they are getting a bonus, raise or other form of financial compensation is minimal.[inlinetweet prefix=”” tweeter=”” suffix=””] Most of the extra cash from tax savings is going into the pockets of stock shareholders through dividend increases and companies buying back their own stock in hopes of boosting its price.[/inlinetweet]
Steve Jobs usually spent more on his brand when others cut back, but Apple has a huge advantage in brand equity. Most other brands are going to have to focus on their brand promise every day with every customer. It’s more than just price, it’s about focusing on the most basic elements of marketing, the key brand promise.
Big data, social media marketing and programmatic ad buying aren’t going to help marketers when sales take a dive. [inlinetweet prefix=”” tweeter=”” suffix=””]The biggest canard sold to marketers is that consumers want to have a relationship with your brand[/inlinetweet]. [inlinetweet prefix=”” tweeter=”” suffix=””]How many brands, in your pantry, do you want to have a relationship with beyond the basic brand/product promise?[/inlinetweet]
[inlinetweet prefix=”” tweeter=”” suffix=””]Brands need to focus on both solving customers’ problems and make them feel good about your product[/inlinetweet]. People flock to Starbucks because they feel “they earned” their premium coffee drinks, but in the grocery aisles consumers have a lot of choices and your brand may wind up back on the shelf if you’re not connecting to your prospects and customers.
