By the third week of January, leading economists, financial analysts and pundits had stopped talking about whether the United States is heading into a recession and started arguing about how serious the recession will be.
That is a situation that poses both challenges and opportunities for the incentive industry. "In a downturn, manufacturers can reduce production, lay off employees and wait for demand to increase, or they can continue to produce and increase demand," says James Feldman, president of Chicago-based James Feldman Associates. "Recession requires business stimulation to keep sales going—it is a perfect time for incentives, it is time to dig in more." Typically, he adds, convincing customers of this "does not require a great amount of salesmanship."
That said, in past economic downturns, many companies' first reaction has been a short-term, and shortsighted one: They cut "discretionary" expenses, notably incentive and recognition programs.
Not everyone is worried. "The demand in five-star hotels has never been higher, and the U.S. market is still strong," says David Hornby, commercial director of VisitLondon, the city's tourism board. "The [destination management companies] who work a great deal with the U.S. market are also very bullish."
As for the broader economy, Feldman has a grim view of the likelihood of a recession: "I think [we're] in it and I think anyone who thinks [we] are not is an idiot," he says. "This is the tip of the iceberg. We don't have relief in sight."
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