After hearing that the US unemployment rate was at a 5 year high and mortgage delinquencies were the highest in 29 years, my hopes for a near-term economic recovery were not very high. There was also news Friday of a meeting between US Treasury Secretary Hank Paulson and executives of Fannie Mae and Freddie Mac. The Bush administration is apparently near an announcement of a plan to prop up the two mortgage giants.

The government had already made it clear that it would step in to stop any failure at either company, so the announcement of an actual bailout will likely only bring bad news to a struggling economy. The economic struggles in the US are very real, but there is also a large psychological aspect to it, especially when considering consumer spending. Any major news (like a Fannie-Freddie Bailout) is going to make Americans further close up their wallets and reduce spending.

This is the reason that I mention stories like this on Profit Program Reviews, is that changes in consumer behavior results in changes in our market (affiliate marketing/sales). Given the glum look for any strong economic pickup this year, I expect a few types of products to outperform over the next few months.

As people feel less secure about their jobs and incomes, quality products that deal with working from home should sell well this year. I especially think that lower price-point products (ie less than $50) will do very well. People are going to look for cost-effective ways to diversify their income. Also, products dealing with debt relief and managing creditors will likely do well as more people fall behind on payments. In this category, I expect any informational product dealing with foreclosures and mortgages to be a star.

At the same time, there are some products that I expect to see significant declines in sales. Consumers and small businesses are afraid to lock themselves into large and/or long term purchases right now. Many online services offer significant savings for long-term signups of 6 months or a year. I expect that buyers will have a harder time swallowing these purchases and will opt to stick with month-to-month plans. For services like Wordtracker that are much more expensive on a month-to-month basis, I think they will really struggle without strong promotions. It would be in the best interest of these services to bring the effective costs of a month-to-month plan and a longer term plan, closer together. I’d try to focus your marketing on the products poised to do well in the down economy. Staying ahead of the trends can help keep your business thriving as the market shifts.