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Tuesday, December 8, 2009

Nielsen as an Economic Bellwether?

A few weeks ago a friend and Media Realism panel member sent me the following: “Don, what do you make of this? In the 08/09 season, television viewing in the US reached an all time high, up 4 minutes from the prior season and up 20% from 10 years ago according to Nielsen. The average household in 08/09 watched 8 hours and 21 minutes a day of television on average, which is an all time high as well. Why is television viewing at an all time high in a world with videogames, DVD’s, computers & internet, etc?”

I gave him a quick answer but promised this post to provide a more measured response. And, those of you who know me, brace yourselves. I will actually say something nice about Nielsen!

Many of us have been surprised over the years as TV viewing continues to go higher and higher. Part of it can be explained away by an aging population but with so many gadgets at our disposal and non-TV video options, the recent small move to a new plateau was surprising.

Here is my theory—Last Friday, the government excitedly announced that the official unemployment rate had dropped from 10.2 to 10.0%. Every believer in Obamanonics cited this as proof that the economy was on the mend and prosperity was around the corner as Herbert Hoover (sic) once said. Well, my take is a bit different. Yes, any decline in unemployment is welcome news and no one is cheering for a rebound next year more than I. But there are structural issues out there that indicate that things are still not great and the Nielsen annual data may be an indicator as well.

There are a handful of apocalyptic analysts out there who say unemployment is not 10% but closer to 20%. They exaggerate but make a good point. The real rate of unemployment is much higher than 10%. It does not include the following people:

1) Those whose unemployment compensation has run out.
2) The long term unemployed who are so discouraged they do not look for work anymore.
3) Recent graduates who cannot find jobs, live with Dad and Mom but are in no one’s statistics.
4) The young elderly who were downsized and began receiving Social Security on their 62nd birthdays.
5) Millions who work part time because they cannot find full time work.
6) The “underemployed” who make a fraction of what they once did but do a lesser job to make ends meet and have some form of healthcare.

What do all of these groups do? They watch a lot of TV. They cannot afford to do much else for entertainment. The Social Security Administration says that in the past year a record number of people applied for monthly checks. Why? They need the money and cannot find acceptable work. These early baby boomers include some who planned to retire that young, some who are burned out and wanted to leave but also a large group that knows few are going to hire a 62 year old in a meaningful job. So, they collect their checks and spend way too much time in front of the tube.

Here are a few more scary stats that make the case for record high TV viewing. Some 23% have negative equity in their homes (if they sold today, they would get less than their mortgage for it) and foreclosures continue to explode. The American consumer has never been further behind in virtually all yardsticks—mortgages, auto loans, credit card bills, and student loans. Finally, the saddest figures of them all—1 in 8 Adults are on food stamps and tragically, 1 in 4 U.S. children.

There is no shortage of things to do or ways to watch video other than TV. But directionally Nielsen is telling us something. People are stretched as never before in our lifetimes. They watch TV in record amounts because they have few options.

If we see TV viewing dip in late 2010 or maybe 2011 we have a very reliable indicator that the economy is truly on the mend.

Should you want to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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