A recession is defined as “two consecutive quarters of negative GDP”. With Q1 of this year at a negative 0.3%, all it will take is a Q2 negative number to trigger a recession. While many fear this outcome, I have found recessions to be great opportunities to expand your business. In this Billboard Mastery podcast we’re going to review the benefits derived from an economy in transition.
Episode 118: Why I Love Recessions Transcript
The first quarter, 2025 GDP numbers came out and they were negative, -0.3%. And the minute a quarter is negative, it puts you in a position, if the next quarter is negative, to actually have what's called a recession. And it's probably a pretty good bet with all of the layoffs that are going on in the government, tariff issues, it's pretty safe bet that Q2 will also be negative. And when that happens, we label the American economy into a recession. We've not had an official recession now since 2008. It's been a long time, long overdue. But many people fear the use of the recession word because it's often a self-fulfilling prophecy. When people hear America's in a recession, they stop their spending and then the recession becomes much, much worse. This is Frank Rolfe of the Billboard Mastery Podcast. We're going to talk about why I'm a big fan of recessions. Some of the best things that have ever happened to me came via recessions. And why recessions are not always a negative. A lot of it is how you look at it. The spin that you put on it internally has a lot to do with what the ultimate reality is. So what's good about a recession?
Well, the first thing that would be good, if not great, about a recession is the simple fact that since 1950, every recession has resulted in interest rates declining between 2% and 3%. Now, if you take the interest rates right now and take them down two or three points, what do you end up with? Well, you end up with attractive mortgage rates again on home purchases, but you also end up with very much more attractive commercial loan interest rates if you were to borrow money to build or buy a billboard. And since that interest rate is such an important part of business in general, the fact that recessions always create lower interest rates is a true blessing. You'll probably recall that the interest rate during the 2007-2008 Great Recession, those rates dropped the lowest they have in American history. And then Jerome Powell, starting in Q1 of 2022, decided he would raise them higher and faster than they had in the prior 40 years. So right now America really needs lower rates. And if it requires a recession to get them, well, then I guess that's just part of the package.
But a recession right now would be very, very beneficial as far as interest rates go. But what other reasons are there why recessions might be good? Well, one big item is they open up opportunities. When you have a broken playing field, that's when you can get a lot more accomplished. There was a Kansas City chief player a couple decades ago called the Human Joystick. This was the guy that had I think the world record for most kickoffs or punt returns into the end zone. And they were against impossible odds. If you watch the replays today, it doesn't even look possible what this guy did. But you'll notice in all of those where he was really the most proficient is when the other team had all their players staggered all over the field. Know how the people run down the field when they do the kickoff, for example. He worked best when they weren't, didn't all arrive at the same time because when they came in staggered, he was just really good at avoiding each and every one of them. He ultimately would find a hole in the line and they would run right up the field faster than they could and no one could catch him.
But the same is true of a lot of billboard deals out there. When things are solid and performing and we're not in a recession, then it's much harder to get a good deal than when things go down the drain. Let me give you my own real life story of that. Back in the savings and loan crash in Texas back in '87, '88, I realized this was actually a great opportunity for me because now maybe I could buy and build signs with less competition because a lot of the big players had dropped out or buy signs at bargain basement prices. So I saw the recession as an opportunity and I was able to grow my billboard company by 100%. I doubled in size during that recession and the recession truly was the best thing that ever happened to me. But it's not just me, it's many other people have realized this juncture. Conrad Hilton, who became at one time the largest hotel owner in America, he owned every famous hotel. He owned the Drake, the Plaza, the Waldorf. He owned them all. How did he do it? The Great Depression. He actually owned a chain of hotels going into the Great Depression. Wasn't that big a thing at the time.
But then he lost everything during the Great Depression and he came up with a new theory. Why was he building hotels at very expensive prices during the booms? Why not just wait for recessions and depressions and buy them for a penny on the dollar? That became his new business model and he only bought and expanded his hotel chain after that during every economic contraction and recession. That was his engine to make forward progress. So there's another person who found that recessions are really good things. And then don't forget J. Paul Getty. J. Paul Getty was the richest person in America back in the, I think, the '50s and the '60s. So he was kind of the Warren Buffett of that era, although even bigger. He was bigger than in today's world we've got Jeff Bezos, right? And others. You have Amazon, you've got Elon Musk. And he was richer at that time than all of those guys. But if you look at how he did it and what he loved, once again, he loved recessions. If you read his autobiography, recessions to him were the greatest thing on earth. He all the time dreamed during good times for a good old recession.
So it would break up the playing field, it would reduce prices if he wanted to buy things, it would lower competition, and it would, what he described as clean the barnacles off the boat. He saw recessions, when the tide goes out, as the opportunity to go in and sand all those barnacles off, repaint the bottom of the ship, varnish the bottom of the ship. So again, he was a huge, huge fan of recessions. Now, of course, there's one dark side to recessions, which is you have to keep your billboards full. You have to find advertisers. The good news is there's a lot of advertisers out there which are very recession resistant. People like McDonald's, people who rely on signs to be very point of purchase and say things like, okay, exit now. You can't do that with an online ad. You can't do it with a newspaper ad. You can't time it so they read the ad at the very moment the exit's coming up. So billboards have a core group of companies. That's why McDonald's is the largest billboard advertiser in America that absolutely rely on billboards as their own almost premise signage. And then you have other people that do all kinds of things regarding the byproducts of bad times.
You have lawyers who are looking for customers that need bankruptcy filings or sue employees. There's a whole world of goods that sell well in both good times and bad. In fact, it's been said, as I've said before, that in bad times, the most powerful forces are necessities and vices. That's why St. Louis used to always say their slogan was first in shoes and first in booze. Because during the Depression when they adopted that slogan, it meant that they were the first in America in shoe production, which you had to have shoes even during the Depression. And first in beer production. Because when times were bad in the Depression, people bought a whole lot of beer. But you will find advertisers if you will look hard and you look think about those two things, necessities and vices. But more importantly, you'll find a lot of really good billboard deals. As some people jump ship because they don't want to mess the recession, other people may have their billboards go into foreclosure. I bought many a billboard at a foreclosure sale or auction. But the bottom line is do not fear recessions.
Now, it's been about 17 years since our last recession, the 2007, 2008 Great Recession. But we can't go on forever without them. America runs in cycles. You have to have recessions. They're just are part of our natural economic rhythm. But don't fear them. Recessions are often a great opportunity for you. This is Frank Rolfe with the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.