This is cyclical recovery. We all tend to confuse the cyclical and the secular. Newspaper revenues are subject to economic cycles. They ebb and they flow. But there is a second force, the longterm decline of the primacy of mass-circulation print, that is undeniable. The result is that you get kind of a sawtooth graph, pointing down. You might fool yourself that it’s actually pointing up by failing to consider how much faster the broader market is growing, but the fact is that newspapers have been declining in market share for many decades.

As we begin to crawl out of the hole created by the Bush administration’s disastrous policies, we need to guard against slipping back into the bad behavior of the past. This economy has done us a brutal favor by waking us up. Let’s not waste it.

link: yelvington.com | Steve Yelvington’s media weblog

Steve Yelvington points to some “green shoots” relating to the economy and newspapers. I’m less than optimistic.

With 70 percent of the U.S. economy dependent on consumer spending (and advertising is deeply tied to that particular economic force), I don’t see a huge turnaround in the economy any time soon. Consumers are squeezed by massive amounts of debt and hunkering down in this economic uncertainty. Residential real estate is still weak, and commercial real estate is facing a huge meltdown of its own. And banks are being closed left and right across the nation by the FDIC.

I am certainly not an economist, but economists do predict a “jobless recovery” for the next couple of years. I do not see how consumer spending will rise to the levels that we had prior to this economic meltdown any time soon. And that adds a layer to Yelvington’s point about the cyclical and secular nature of recovery.

The cyclical of this economic downturn may turn out to be much more secular than people think. The Great Depression had a profound effect on the generation that went through it, and this economic cycle will likely have a similar effect on consumers.

Yelvington points to a Gordon Borrell report that predicts rising newspaper ad revenues beginning next year (how they predict growth rates through 2014 is beyond me). But I think the most salient part of Borrell’s post is this quote:

True, it all equates to more of a dead-cat bounce than anything else. And even at 2014 levels of just under $30 billion, newspaper advertising won’t be anything near the $55 billion we saw earlier this decade. Nor will it ever return to that level. (emphasis added)

I do agree with Yelvington’s final point:

Newspaper companies have sinned against their own interests by borrowing like mad to buy more of the past when they should have been investing in the future. Corporate takeovers, luxury offices and new printing plants belong to the 20th century. The future for local media is in new digital products focused on the needs of local businesses. Do we have the will to pursue that future? I think we do, but knock on wood.

Newspaper companies will need to deleverage all of the massive debt they’ve grown, and that’s going to be a painful process. I just hope newspaper executives will learn the lessons from this debt bubble and not go back to spending money they don’t have in the future.

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Illinois has four. California and Georgia lead the nation. The data came from the FDIC’s list of failed banks, which I put in a spreadsheet and then manually counted them by state after sorting the columns. I also removed any bank failures prior to 2007, since there was a gap between 2007 and 2004.

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