Dismal Science

By Andrew Paparozzi
In November 17, 2008

Ever wonder why economics is referred to as the “dismal science”. The way things are today, we need not get into the late 18th
century writings of Thomas Robert Malthus—the latest data on the economy seem dismal enough. Retail sales are down significantly. Even when we exclude
gasoline service stations, sales fell 1.7% for the month of October, and for the past 12 months are down 5.7%. The consumer is not in a buying mood. Unemployment lines are getting longer. The latest report from the Bureau of Labor Statistics put new weekly jobless claims at 516,000—a level not seen
since right after the 9/11 terrorist attacks. At 6.5%, the unemployment rate in October was the highest in 14 years and it’s going higher. It seems that everyday there’s another big layoff announcement. On top of all this, the mess in the financial and housing markets remains messy.

Economic conditions have deteriorated rapidly. Following a 0.3% decline in inflation-adjusted GDP for the third quarter, the latest consensus from Blue Chip Economic Indicators now shows sharp contractions in economic activity for the current quarter (-2.8%) and the first quarter of 2009 (-1.5%)—sharp enough to result in a decline for the full year of 0.4%. The previous forecast had 2009 rising 0.5%, and the one before that was showing an increase of 1.5%. Forecasts are always revised, that’s the nature of the beast, but this is a bit much. Unfortunately, we may not have seen the end of these downward revisions—not just yet. Too much uncertainty persists from the nature of the rescue program to a change in Administrations for any meaningful near term improvement. Just to put the GDP decline for the year in perspective, GDP fell 0.2% 1991 and plunged 1.9% in 1982.

As we know all to well, the commercial printing industry is not going to escape untouched. Based on NAPL estimates, 2008 and 2009 are likely to show large back-to-back sales declines, and the range shown for 2009 in the NAPL Printing Business Conditions: November 2008 could very well be shifting
lower. As discussed in the previous posting, we cannot overemphasize the point that “simply surviving recession isn’t enough anymore.” While the cyclical downturn will pass, readers of the NAPL
State of the Industry Series also know that, much like the Energizer bunny structural changes will keep on going.

Andrew Paparozzi

Joseph Vincenzino

Kong Wang

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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