Mixed Messages

By Andrew Paparozzi
In March 3, 2011

Current developments are giving mixed messages when it comes to the health of the business environment. On the one hand you have consumers expressing more confidence, business investment on solid ground, hiring plans loosening, labor markets beginning to mend, and until recently a nice run on Wall Street. As a consequence, many economic forecasters have raised their outlook for this year.  On the other hand—as economists we’d be lost without the other hand—you have a housing market that remains in the doldrums with little prospects of improvement in sight, rising commodity prices with higher inflation looming, and states and localities struggling to solve their fiscal problems. When you throw in the budget battle in Washington DC and the turmoil boiling over in the Middle East and North Africa, the direction forward is anything but clear. 

The consensus forecast in February’s Blue Chip Economic Indicators showed GDP adjusted for inflation rising 3.2 % in 2011 and 3.3% in 2012—not great but respectable gains, and certainly better than was being projected just a few months ago. The message we should glean from this outlook is one of continuing recovery for both the economy and the industry and that a quick return to a period of contraction is becoming increasingly unlikely. But that’s it. The outlook doesn’t tell us anything about the prospects for individual companies. Some will do quite well, while others will struggle or worse. Recoveries in our industry are no longer the rising tides that lift all boats, but instead are increasingly reserved for companies best prepared for what the industry is becoming.

Based on data from the NAPL Printing Business Panel, sales rose for almost three-fifths (59.8%) of the Panel in the fourth quarter of last year, while declining for two-fifths. A year ago, results were 20.0% up and 80.0% down. Thus, we’ve seen a major reversal. But, overall, sales for the period rose only 0.8%—a major improvement from the steep contractions we were seeing, but no time to let our guard down. In fact, with the industry evolving as it is, such a time has been relegated to the dustbin of history. For more data from the Panel, see the NAPL Printing Business Conditions: February 2011. And, with all the various conflicting messages around, here’s a message none of us can afford to lose sight of: Recovery is what we make it—there are no guarantees of participation. 

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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