The Pandemic Recession: Likely Impact on Art Sales and Artists

In this post I'm beginning to set out an overview of what I think are key issues for artists during The Pandemic Recession. It includes some background reading and covers

• the biggest drop in economic history since records began
• the impact on art sales and artists
• lessons for artists from the 2008 recession 

The biggest drop in economic growth since records began

Below is proof positive that we are very definitely going in a recession despite the fact we've not yet got to the actual point of being able to define a recession i.e. a recession is when growth in the economy falls for two quarters in succession. Technically this is when GDP falls for two three-month periods - or quarters - in a row. (NOTE: The recession will have a different profile in different countries. I tend to talk about the UK because that's where I live)

I know of no better way of persuading people that this recession is very serious than this trend line which was published by the Office for National Statistics (ONS) this morning (SEE GDP monthly estimate, UK: April 2020 if you want the full story). 

• The trend line for UK GDP goes from January 1997 to the present. 
• The little blip in the middle is the global banking crisis of 2008 and the aftermath. 
• The big vertical line on the right is April - when UK GDP dropped by the biggest ever amount since records began.

There has been nothing like this ever before in economic history! That's how bad this is.  Note also it's bigger then the drop that the economic statisticians NOT employed by the government were predicting!

Source: Office for National Statistics – GDP monthly estimate

The impact on art sales and artists

The major implication for artists of the recession is going to be a BIG REDUCTION in available cash to spend on art - which makes selling art a major challenge i.e.

• No matter what you do you cannot make people spend what they have decided to save - the biggest mistake any professional artist can make is to assume that somehow they have "the magic answer" or are uniquely exempt from either the recession or the constraints within the marketplace.
• People throughout the economy will conserve their cash during a recession - because they don't know whether they will lose their jobs / businesses until we come out the other side of the recession. It's a very sensible strategy - for them. 
• Demand for art - and sales of art - will drop significantly because
• those who budget for art purchases will withhold or reduce the amount they spend on art. 
• middle range buyers disappear - for a long time (this is what happened in 2008). Keep a very close eye on what sells at what prices.
• impulse buys of lower priced art will reduce significantly on the front end of the recession and recover slowly
• Avid art collectors devise means to keep collecting - within their budget
• buyers substitute eg people switch to prints from paintings and/or buy smaller works - or rearrange all the art on their walls so it feels different until they feel like dipping their toe in the market again (guess what I did this week!)
• overall initially lower priced art tends to sell better than middle range art (check out the The Artist Support Pledge with a ceiling of £200 - which has generated has generated an estimated £20 million for professional artists and makers across the globe)
• Specialist genres with a major fan base do much better than generalists - but still typically experience a decline in income i.e. it's not the same for everybody
• specialist art genres cope better because their fans are faithful - and artists already have a following
• generalists tend to get hit hard i.e. those not known for anything in particular and who have no following. A "scattergun" approach to painting lots of different subjects does not create a following.
• professionals with difficult subject matter have limited their market from the outset - and response to their art may be idiosyncratic
• it's time for professional artists to review the type of art they create going forward
• Art galleries will close (forever) - meaning fewer places to exhibit art when the recovery comes - leading to a longer recovery time for artists. Essentially this is because an awful lot of gallerists are people who lack business skills and don't consistently maintain an adequate reserve of working capital.  Check out the back stories of those who move over into art dealing at art fairs etc - if they couldn't manage the money last time, it's more than likely they won't be good at managing money going forward. 

The one exception to the gloom and doom is art sales at the very top end of the market - where art is typically bought and sold by people why people with extreme wealth who are, on the whole, resistant to recession fallout. However those reading this blog are typically not in that league so I will ignore that phenomena.

Lessons for artists from the 2008 Recession

...in my view, artists are also most likely to avoid problems and/or achieve success if they are well-informed about the market they are operating in. Recognising problems that you might be facing is the first step to dealing with them. (Me - commenting back in 2008!)

Back in 2008, I wrote a number of posts writing posts about how artists can meet the challenges presented by the current state of the economy then. 

Some suggested I was being unnecessarily pessimistic at the time - but in the end that did not turn out to be the case. (I have a very good track record in "reading the runes"!)

• Many of the blog posts are as relevant to day as they were then - albeit the circumstances are different
• I'd suggest a bit of reading would do no harm - particularly for those artists who have zero experience of what it's like selling art in a recession.

ESSENTIAL READING What should artists do about marketing their art in a recession? (23 January 2008) 

It's time to talk recession - and what next!

The Covid-19 Pandemic to date has made economic survival very difficult for a number of artists.  However the coming Global Recession is going to make life difficult for a lot more artists - all around the world.

It's time to take stock and think about what this means - in the short term and the next 2-3 years.

This post focuses on:

• how I'm going to try and help in the coming weeks / months / years
• how you can contact me - with suggestions and queries and ideas
• current predictions about a global recession

The OECD published its Economic Outlook report today.

• This provides forecasts for the scope and size of the recession 
• The last section below deals with those predictions - and the nuance of the one hit or double hit recession.
• It focuses on how long this recession and period of uncertainty will last

OECD Projected REDUCTION in GDP in countries across the world (i.e. national economies contract)

Making A Mark - The Way Forward

I'm proposing to write a number of posts in the coming days and weeks

• focused on how to help artists survive and thrive - for example
• what to cut
• what to improve
• what to build
• creating checklists of things to think about and do - in relation to creating / marketing / selling / being business-like
• as an artist
• as an art teacher
• as an art gallery
• as an art co-operative
• re. art fairs
• re. exhibitions and competitions.

I'm inviting you to SHARE WITH ME:

• the strategies you have used in the past which WORKED (eg 10 years ago re the banking recession). I can certainly remember some of the things which happened then which I'd recommend people do think about or don't repeat!
• the dreadful mistakes you've made in recessions in the past and definitely will NOT be repeating this time around.
• the innovation you want to embrace
• the new initiatives and approaches you're thinking of creating / following
• how you cope with uncertainty

Essentially I want to help in any way I can to share learning from the past - and creativity re. the future.

I'll also be on the lookout for helpful blog posts and articles written by those active in the art economy - whether they are artists, art dealers, art galleries, art fairs or whatever.

You can share contributions - or ask questions you want the answers to - with me via:

• either the Contact Page on Art Business Info for Artists 
• or my Facebook Pages / Messaging re. 
• https://www.facebook.com/artbusinessforartists/ and 
• https://www.facebook.com/makingamark2/)

I'm pondering on setting up a community linked to one of the pages (probably the Art Business Info for Artists FB Page) to enable artists to share what they need help with and what they are doing to address the various challenges.

The Global Recession - cannot be ignored!

The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being. 
OECD’s latest Economic Outlook

What follows is not a pleasant read. However in order to plan to cope with the recession you need to know what's coming at you.

I'll talk more in future posts about very specific issues you will need to address in relation to the business of being an artist - based on what we know happened in the last major recession.

Get on and do!

I firmly believe that the most pragmatic way forward is to 

• understand what we are facing and 
• make plans accordingly - for at least the next two years that this Recession will be felt.

I predict that:

• All artists who ignore the coming recession may well not survive it and will also become impoverished in the process
• However, start making realistic plans now and you may well come out the other side intact.

The Nature of the Global Recession

Today the the Organisation for Economic Co-operation and Development (OECD) published
The world economy on a tightrope

Conclusion #1: The global outlook is highly uncertain

This is the projected decline in real GDP as a result of the Coronavirus Pandemic for the seven countries which make up 

The darker colour relates to the additional impact (i.e. additional decline in GDP / deeper recession) if a second peak occurs in a significant way. (i.e. why it so important to prevent that from happening!). The one thing that is certain is that the deeper the decline the longer it takes to climb back out of it.

FOR ARTISTS: the significance of this recession, how deep it is and how long it lasts relates essentially to the buying power of their customers in the marketplace. Sales of art - except at the wealthy end of the market - took a deep dive in the last recession and very many art galleries also closed. There's no reason to suppose the same will not happen this time.

This is the outlook for the G7 countries

BELOW is the outlook for the OECD countries - Spain is the worst affected and Korea is the least effected.

The outlook for countries across the world appears at the top of this blog post.

The projected reduction in GDP in OECD member countries

Those taking the biggest hit are the economies with a significant part of their economy dependent on the service sector. Another way of looking at this is those aspects of the economy which are discretionary as opposed to essential.

Conclusion #2: Amid high uncertainty, two scenarios are possible

The two scenarios are:

• Double-hit scenario: A second wave of infections hits before year-end
• Single-hit scenario: A second wave is avoided

Overall, economise with not return to the level of performance enjoyed in Quarter 4 of 2019 for at least two years.

Conclusion #3: Unemployment is soaring

Many countries have introduced support measures to protect jobs in the near-term in hard-hit sectors, but young workers in particular are vulnerable.

In the second quarter of 2020 (April - June 2020) the predicted unemployment rates - as a percentage of the population are:

• USA - 17.5%
• OECD - 11.4%
• UK - 11.2%

Unemployment is predicted to continue to increase in Q3 (July - September 2020)

If a second peak occurs this is likely to be towards the end of the year and could have very serious implications for unemployment in Q4 (October - December 2020). Assuming a second peak occurs, unemployment rates are predicted to run at:

• USA - 16.9%
• OECD - 12.6%
• UK - 14.8%

Unemployment is predicted to remain high throughout 2021 - and much higher than pre-Pandemic days.

Conclusion #4: Strong fiscal support is warranted but it has consequences

Public debt will increase very significantly - and at some time this had got be paid back - which may have implications for tax rises and cuts in services.

Conclusion #5: OECD and emerging economies face RECESSION and UNCERTAINTY

The global economy is now experiencing the deepest recession since the Great Depression in the 1930s, with GDP declines of more than 20% and a surge in unemployment in many countries. Even in countries where containment measures have been relatively light, early data are already making clear that the economic and social costs of the pandemic will be large. Growth prospects depend on many factors, including how COVID-19 evolves, the duration of any shutdowns, the impact on activity, and the implementation of fiscal and monetary policy support. Uncertainty will likely prevail for an extended period. Given this uncertainty, two scenarios have been developed to reflect the possible evolution of the global economy. In the double-hit scenario, it is assumed that renewed shutdowns are implemented before end of 2020, following another surge of the COVID-19 virus.

The long road to recovery

Just as the Pandemic is not yet OVER, this is not going to be "just a blip" in art sales. 

I believe we're going to be facing a very different art economy over the next two years. 

It's going to be a long road to economic recovery. My take on the nature of that economic recovery to date is that

• It's going to look pretty different - and that 
• We may well see a number of strategic shifts in how the economy - and the art economy - operates in future.
• Artists will need to be nimble in their thinking and on their feet. 

Are you ready to start addressing these very important issues?