Lackluster Performance

By Andrew Paparozzi
In May 20, 2011

That’s what can be said about the current state of the economy. The euphoria over the economy that seemingly existed at the beginning of the year is waning. At that time, economic forecasts were being consistently revised upward, with mounting suggestions that the economy was going to surprise to the upside. The optimism has subsided, tempered by rising energy and food prices, as well as persistent weakness in the housing market. The latter is being inundated by the supply resulting from foreclosures. The labor market is seeing a rise in “net” private sector job creation. But here too, a jobless rate of 9.0% and an underemployment rate (includes persons working part time for economic reasons and those marginally attached to the labor force) of 15.9% are putting a damper on expectations. 

Fed Chairman Bernanke as well as a majority of economists participating in the Wall Street Journal forecasting survey expect the sharp upswing in food and energy prices to be transitory. That’s all well and good, but what does that mean? Are prices going to return to their pre-spike levels? Although no longer increasing, are they going to remain at elevated levels? If we do get more moderate inflation, is it going to be because of a weaker economy? 

Economic forecasts are being pared; there’s no getting around that. The latest consensus forecast from Blue Chip Economic Indicators shows inflation adjusted GDP rising 2.7% this year. In February, the consensus called for growth of 3.2%. Growing concerns are especially evident among small businesses. The National Federation of Independent Business’s small business optimism index declined 0.7 points in April on top of a 2.6 point drop in March. This index fell despite the best sales performance in over 3 years and a rise in the share of small-business owners able to lift prices. In addition to the impact of higher costs, the political uncertainty resulting from the ongoing battles over the debt ceiling and government deficit are weighing on confidence. 

In the midst of lackluster economic performance, what are the ramifications for print going forward? For starters, individual company growth will be more dependent on internal factors—the strategic initiatives companies are pursuing. Margins for error, to the extent that they exist, will continue to narrow, and protecting one’s bottom line becomes even more critical. The upcoming NAPL Strategic Perspective: 2011 will discuss these and other strategic issues printing companies need to consider. 

Andrew Paparozzi                Joseph Vincenzino

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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