New Recession Indicator Shows Americans Worse Off Than We Thought
Summary
This article discusses a new recession indicator that measures the financial health of the average American, emphasizing real wage growth and unemployment. Hosts should be aware of broader economic trends, as factors like inflation and employment impact guest spending and overall STR profitability.
Key Insights
- •The article highlights the subjectivity of recession definitions, particularly the lack of a standard definition and the reliance on the National Bureau of Economic Research's (NBER) subjective assessments.
- •The traditional measurement of recession through GDP fails to account for the financial health of the average American. The article suggests that a more relevant metric is the average American's wage growth. If your wage growth lags behind inflation, this is not a good sign for the economy.
- •The author created a new recession indicator based on real wage growth and unemployment rates. The indicator suggests that the US economy has been in a "real person recession" for longer than the official definition suggests.
Action Items
- ✓Hosts should monitor economic indicators such as inflation, real wage growth and unemployment to understand how economic conditions will affect guest demand and expenses.Effort: lowImpact: medium
- ✓Evaluate your pricing strategy and consider dynamic pricing adjustments based on the economic climate. In a downturn, you may need to reduce prices to maintain occupancy.Effort: mediumImpact: medium
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