How do we re-ignite the economy?

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COVID-19 is upending lives and livelihoods. Government and Businesses have a challenge planning because rear-view mirror statistics on the economy are a poor guide for what is to come. Our current reporting system of GDP grew out of the shortcomings in data during the 1930s Great Depression. However, with all the modern advances in marketing research and data collection, surely we can do better than a one month to one quarter retrospective look at the economy (as provided by government reporting).

Consider the following examples:

  1. Unemployment is reported by many governments monthly. In the US, the last unemployment reports from February showed the lowest level of unemployment ever. The official March numbers showed only a small fraction of the up-tick that was actually occurring. Yet, as we learned a month later, the initial government figures had to be significantly revised upwards. While government reporting lagged, Market Research firms identified the scale and scope of the unemployment problems much earlier. Market Research surveys showed the degree to which hourly workers are having their hours cut as early as February
  2. Durable goods like automobile are reported by the government monthly and quarterly. This data lags with February reporting coming out March 25, 2020. It showed a 4.6 percent increase in transport driven mostly be motor vehicle sales. Yet, the Market Research industry leaders in automotive measurement found a much larger hit to motor vehicle sales. According to Market Research attribution companies, which measure sales daily and weekly, as well as leading indicators of sales such as website visits and dealer visits, consumer demand is dramatically lower. Government statistics won’t reflect this reality for weeks or months, making it difficult for decision makers to plan accordingly.
  3. Non-durables, such as retail shopping for consumer electronics and apparel is also reported quarterly. Market Research firms measuring location show shopping mall traffic is dropped 75% week of March 18th and through mid-April was down a cumulative 94 percent compared mid-February. Again, Market Research firms report this data in a matter of days but government data lags by weeks or months.

The Need:

Timely facts are essential to good economic planning for government (local, regional, national and international) and for businesses of all sizes. The government isn't organized to provide data as quickly as businesses and policy makers need it. Different companies that make up the Market Research & Analytics Industry provide this data, but it can be hard to know where to go to get the data, and labor intensive to collate different numbers to develop a consensus view. Moreover, many government and businesses have follow-up needs for more data and analysis — but finding the list of leading Market Research providers to meet that need can be difficult.

The Market Research & Analytics Industry Has The Solution:

The Market Research & is an $80 billion a year industry that continuously measures consumer's behaviors, attitudes, and intentions. Through surveys, intention behavior, purchase data and forecasts, this industry serves business through syndicated research, software and custom analytics.

The opportunity is for the Market Research & Analytics industry to share their top-level trend data for a weekly view of consumer demand by industry and country to help business and government decision makers. At the same time, contributing companies gain visibility among business and government decision makers, many of whom will purchase data and services from the contributing companies.

How the Forecast Commons Works:

The goal is more real-time consensus forecast of the most significant component of GDP, consumer spending, to help businesses and governments make data driven decision related to staff and investment. Consumer spending represents approximately 70 percent of leading economies, and the Market Research industry is uniquely positioned to provide a useful forecast for business and government planners.

In Phase I, leading research firms are making their top-line reports available for inclusion in the Post Covid Economy Report. Participating in the ForecastCommons entitles the research companies to be listed as a participant, and these companies will be invited to participate in the industry webinars and press releases to share the finding. Phase I report will be made available by in Q2 2020 to provide valuable perspective on rebooting the economy.

In addition to generating an industry report on the direction of the economy, the other objective of Phase I is to assess the feasibility of weekly data updates in a consistent format to power a high-level consensus estimate for key consumer behavior trends. If this is deemed feasible, Phase II will follow.

Phase II focuses on creating a repeatable process for the Market Research Industry to provide on-going updates to consumer trends. ForecastCommons aims to be a place to spotlight the outstanding research so that business and government decision makers can get a more timely view of consumer trends.

The averaged consensus estimate will be provided to government and business along with the list of research companies contributing to the estimate. The trend data will help policy makers arrive at data driven decisions based on forward looking projections rather than merely relying on out-of-date data on GDP. It will also help the contributing suppliers to gain credit and visibility for their contribution.

Next Steps:

ESOMAR and The ARF already have about 80% of what is required to deliver consumer spending forecasts of GDP components. Major marketers are members, as are leading research firms. Together, these companies are being asked to raise their hand to participate in the pilot program. ESOMAR has a technology platform for sharing insights that was recently completed and will support this overall effort.

Rex Briggs, a member of the Research World Editorial Board, has volunteered to lead the pilot program with marketers and research companies. The deliverable for this group will be initial consumer spending forecasts of select GDP components. The pilot will help refine the structure and process for gathering data, aggregating a consensus estimate, and creating a mechanism to share it with government, businesses and the press.

By participating in this working committee, we will share with you the list of GDP consumer spending components and you will be asked to identify the areas where the company has expertise and data. You will then work with the team to define the easiest process by which you can use the data to make a forecast to be combined with other forecasts (the consensus estimate). Participants will have a say in how the data is gathered and made available to governments, businesses and the press. You will also benefit from early exposure to the forecast of other experts on other parts of the economy so that you and your company have insight on the direction of the overall economy.

Now is a time to come together as an industry and use our collective intelligence to help rebuild the economy.

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