Last week’s terrorist acts and the uncertainty that followed will cause overall mail response rates to plummet, predicts Andrew Davidson, vice president of competitive tracking services at Tarrytown, NY-based market research firm BAIGlobal.
But the continued slowdown in the economy may provide a boost to credit card mailers. “We may start to see consumers looking to extend credit in the face of uncertainty,” he noted.
But this is not to say American consumers will use their new credit to fund shopping sprees. “I think the somber mood felt by all will be reflected in sharp declines in new charges,” Davidson said.
“We won’t have results for this month for a while to come, but there is no doubt economic confidence will be shaken by this, and consumers will be putting off the purchase of big-ticket items,” he added.
During the fourth quarter of 2000, for example, new charges on credit cards amounted to an estimated $45 billion a month, according to Davidson. But even that was a depressed level due to the uncertain outcome of the presidential election, which occupied consumers’ attention during the pre-holiday spending season.
“I think the last thing on consumers minds are responses to direct mail offers,” Davidson said.
The one exception to this may be credit card offers. Response rates, which hovered around 0.6% during 2000, had reached 2.8% during the 1992 recession and could spike to those levels again.
“Recessions aren’t necessarily bad for credit card companies,” said Davidson. “They suffer consequences of more people with bad debt, but they also suffer the benefits of people looking to extend themselves in the face of uncertainty.”
