"I Don't Think They're Prepared": A Recession Could Really Hurt Influencers, And Many Of Them Don't Seem Ready

"I'm always worried about my business..."

In April 2022, Deutsche Bank warned a recession was coming.

John Frickey / Via giphy.com

The major world bank has predicted that "we will get a major recession," mostly due to global inflation. And with US inflation hitting 9.1% in June, a lot of people are feeling a financial pinch that is souring their view on the economy. 

Influencers, many of whom simply sell the image of a perfect life, have never been through a prolonged recession.

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Influencers weren't around for the Great Recession in 2008, the last major recession to hit the US. Those with young audiences might be especially impacted by a recession.

And people don't think influencers are ready for rough financial waters.

A recession is going to give a massive reality check to a lot of influencers from tiktokgossip

Buying houses, retiring partners, and going all in on influencing has become a pattern for some. But if general shopping slows down and your household has gone all in on one platform, could that spell financial disaster for influencers?

Over the past three years, top influencers have made major lifestyle changes, from new house purchases to retiring spouses.

Lauren Kay Sims / Via Instagram: @https://www.instagram.com/laurenkaysims/?hl=en

For example, Lauren Kay Sims, an influencer with over 550,000 followers, semi-recently bought a lavish family lake house. Many followers were blown away by the luxury.

And the husband of Julia Berolzheimer, an influencer with 1.3 million followers on Instagram, left his job to help run the company.

Julia Berolzheimer / Via Instagram: @juliaberolzheimer

Their household income now relies solely on the GIrl Meets Glam and Julia Berolzheimer brands. And they're far from alone. Dani Austin's husband now works for her full time, and Matt Stevens, husband to Lindsay Silberman, even changed his Instagram handle to @Instahusband.

While 2020 did bring financial shock for many, the influencer industry actually saw financial growth as people spent more time online.

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"E-Commerce sales were $870 billion in the US in 2021, a 14.2% increase over 2020 and a 50.5% increase over 2019," says Forbes, using data from the US Department of Commerce Retail Indicator Division. And influencing positively blossomed in 2020, with 55% of large companies having a devoted budget for content marketing according to one report.

What does a recession mean for influencers, who largely make their money by selling people products online?

Longevity of influencers? from NYCinfluencersnark

If no one clicks your affiliate links, how do you pay the bills?

Cathy Peshek, founder of Poor Little It Girl, is a fashion influencer who thinks a recession will impact influencers' income.

@poorlittleitgirl, Alexis Haigler / Via Instagram: @poorlittleitgirl

Cathy told BuzzFeed that her main streams of income are affiliate links, ad placement, and sponsored posts on both her blog and Instagram. 

"I'm always worried about my business, what the next big thing will be, and if I'm going to be successful at taking on a new venture. People certainly give into the 'next big thing' all the time, like TikTok and whatnot, but my priority has always been my blog and getting people to my website. Even if they're not necessarily buying something, just eyeballs on my site is huge for me to keep my business up and running."

One study says 45% of US businesses are "highly concerned" about a recession, and some are already making cuts.

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According to the study, 6% of businesses have already cut their marketing budgets. Influencers with high follower counts and good engagement can make four, five, and six figures from sponsored partnerships. With decreased marketing spend, influencers could see a major loss of income.

Latasha James, a YouTuber and business mentor, told BuzzFeed she thinks influencers that serve, instead of just sell, will do well during a recession.

@thelatashajames, Shelby Dubin / Via Instagram: @thelatashajames

"I see people turning toward the online influencers who provide value in some way, whether that’s education or entertainment. However, I do think the era of 'flex content' is dying a slow death. No one wants to watch out-of-touch influencers brag about their lavish lifestyles when everyday people are struggling. Creators should be mindful of what’s going on in the world and ask themselves how they can help their audience, not just sell to them."

A prolonged recession is bad for everyone, and history shows that consumer spending drops in recessions.

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Data from the Bureau of Labor Statistics shows that in recessions, people spend less at restaurants and on furniture and appliances. People cutting back means fewer sales for influencers who sell mainly lifestyle goods.

However, influencers that focus on secondhand shopping or slow living might see a boost during a recession.

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During the Great Recession, many secondhand stores saw an increase in sales. In 2009, Half Priced Books opened four new stores. As people's income changes, it's likely they'll turn to influencers with a more affordable approach to life who can help them reduce waste and save money.

Both Cathy and Latasha anticipate some drop in sponsorships during a recession, and they plan to focus on other areas of their business.

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"My major concerns are consumer spending decreasing. If that goes down significantly, brand sponsors will likely cut their advertising budgets due to diminishing returns," says Latasha. 

She thinks that her focus on helping people freelance and run their own business will be a saving grace. "We tend to see freelance work pick up a bit during recessions due to full-time positions being eliminated, so I do see higher demand for my services, as well as for my courses which help freelancers navigate self-employment."

Cathy thinks some people will turn MORE toward influencers' free content during a recession.

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Cathy worked in fashion during the Great Recession and saw magazines drop like flies. "In 2008, when all the magazines folded and people really embraced fashion blogging, I was working at a magazine that folded in NYC. And almost every magazine I ever worked at has folded...disposable income on a magazine is hard to swing when you're watching your wallet more. But blogs like mine are free for people to consume." Cathy is going to continue to focus on driving visitors to her website.

Ultimately, a recession will likely weed out some influencers.

As people's financial lives change, any online figure that doesn't have a value add could be phased out of people's lives. No one wants to follow someone who makes them feel bad about themselves during difficult economic times.