Less Bad

By Andrew Paparozzi
In May 8, 2009

Despite a steeper-than-expected drop in first-quarter GDP, the overall tone pertaining to the economy is improving. This seems to be the case even though the Bureau of Economic Analysis’ (BEA) initial estimate of GDP in the January-March period showed an annualized decline of 6.2%, while the consensus forecast from Blue Chip Economic Indicators was looking for a decline of 5.1%. Was the economy during the first quarter significantly worse than anticipated? Not necessarily. Much of the difference reflected a reduction in business inventories, which may prove to be a positive going forward.

“Less bad” seems to be the tag being applied to much of the data on the state of the economy. The latest case in point: a decline of 539,000 nonfarm payroll jobs in April just reported by the Bureau of Labor Statistics (BLS)—a substantial decline, but the smallest in six months. A similar point can be made about weekly unemployment claims—still high but falling. Not all data fit into this category. Despite consumers cutting back on their use of credit, stores recorded their best sales gain since last August. What’s the message we can take away from much of the recent economic data? Unlike what the government used in applying stress tests to banks, we may be able to take some of the worst-case scenarios off the table. The data aren’t showing that the recession is over, but they are clearly signaling that conditions are not as bad as they were.

Based on the NAPL Printing Business Panel, we’re beginning to see similar signals in the printing industry. Half of the Panel still reported that business was slowing in April. But this compares to three-quarters the month before and is the lowest reading since last September. Similarly, 21.6% report that business picked up last month, an improvement from 9.1% in March, 10.5% in January, and the highest in a year. Furthermore, while almost 15.0% reported that business was slowing a lot, over 37.0% did so in March.

As further evidence that conditions in the industry may not be as bad as they recently were, almost 44.0% of Panel members responded yes when asked, are you seeing any (no matter how minor) encouraging signs? This is more than double the percent that responded affirmatively in March. But before we get too euphoric, NAPL estimates that the decline in commercial printing industry sales during the first quarter approached 15%. And although the deep recession the industry is experiencing may no longer be steepening, it is far from over. We will discuss recent developments further in the NAPL Printing Business Conditions: May 2009. For steps on how to best navigate going forward, see the NAPL State of the Industry: Strategic Perspective 2009 and the NAPL Executive Brief, Finding Opportunity in the Recession.

Andrew Paparozzi        Joseph Vincenzino        Kong Lue 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.

Leave A Comment