The Economy is Rebounding; is Consulting Poised for Improvement?
by Mark Sklarow, Executive Director, Independent Educational Consultants Association
Based on facts and figures alone, we know the economy is showing significant signs of recovery. We have had two consecutive quarters of positive GDP (Gross Domestic Product) growth, and this alone would mean that the recession is, technically, behind us. While employment figures have not shown dramatic improvement, monthly losses of over a half a million jobs shrank to losses of fewer than 10,000 at the beginning of the year, and in March we saw actual growth. So things are better, right? Well, polls indicate that a solid majority of Americans believe we are still in a recession. Most experts think that when we see relatives unemployed or hear of neighbors losing their home, the average person remains cautious and pessimistic. And while unemployment has fallen below 10%, most experts think the real number (including those who stopped looking for work or took part-time jobs) remains remarkable high, at nearly 20%.
At the beginning of the recession I suggested that consultants could better judge the likely impact on this profession by looking at two figures: consumer spending and consumer confidence. That is, are average Americans beginning to spend money, particularly on non-necessities, and are they showing signs of confidence in a rebound that makes them a bit more comfortable, agreeing to a major purchase? So what do we know? The Conference Board tells us that consumer confidence index began to rebound in March, with more Americans thinking that the economy will improve over the next six months than those who believe it will get worse. Significantly, consumer spending increased for five straight months—despite the crippling snowstorms in February—and has exceeded the expectations of economists. Spending on bigger ticket items has improved as higher wage earners are beginning to believe that if they still have their job, they weathered the storm and are safe.
So what does this mean for consulting? I believe we have begun to turn the corner. I am hearing reports from members across the United States that things have begun to pick up. Particularly in college advising the trend seems very positive, while things are rebounding a bit more slowly in therapeutic and traditional boarding placements. I hope more members will e-mail me or post what they are seeing so we can gain a broader perspective. To be sure, there are some parts of the country where things remain very, very difficult, particularly areas where unemployment remains at twice the national average. However, as the stock market continues to improve (it is over 11,000 as I write this blog), companies return to matching retirement contributions and job security returns, we can count on continued improvement in educational consulting. Many have heard me say that consultants will do better if they allow clients to pay in smaller amounts, spread out over time: when any economic uncertainty exists, people want to pay out of their checkbooks, not out of savings or by cashing in a 401(k) or bond. The need to dip heavily into savings or home equity is one of the things preventing therapeutic programs from rebounding more quickly.
So bottom line: I think we are at the beginning of the improvement and I suspect we’ll see real signs of increased clients loads. Those who will gain the most are consultants who can be identified as qualified, competent, and worth the cost. We hope that membership in IECA will provide that reassurance as the economy brings families back to consultants for educational advice.
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