Not Out of the Woods

By Andrew Paparozzi
In October 30, 2008

The process of deleveraging (selling assets to raise cash needed to meet obligations) along with rising expectations of a global recession has hammered global equity markets. While government measures to inject liquidity and lower interest rates (the Federal Reserve cut its target for the federal funds rate another 0.5% to a four-year low of 1.0%) can relieve pressure and provide ongoing support, the process still has to run its course, and it is far from over. And let’s not forget that both consumers and businesses will be scaling back in order to conform to the new realities. Equities may rebound as bargain-hunters begin to get off the sidelines, but the adverse impacts on the economy will linger for a while.

The latest release from the Bureau of Economic Analysis shows that GDP, after adjusting for inflation, fell at an annualized rate of 0.3% in the third quarter with deep cuts in consumer spending. As fears of a global recession mount, the debate in the U.S. has quickly shifted from one of recession/no recession to how long/how deep. The latest consensus from Blue Chip Economic Indicators (October) shows GDP declining another 1.1% in the fourth quarter, with the first quarter of 2009 is expected to be essentially flat—declining 0.1%. According to the consensus, the economy begins to edge higher in subsequent quarters, but growth remains sub-par. Given current conditions, this is probably the best we can hope for. Nonetheless the elements that will lead to economic recovery are beginning to take shape.

As we know all too well, print is not immune to economic difficulties. This year sales of the commercial printing industry will record their first decline since 2003, with a drop somewhere in the vicinity of 2.0% to approximately $88 billion. Prospects fornext year are not shaping up to be any better. As the focus on the economy remains on the national scene, lets not forget that regional developments still play a significant role. During the 1998-2008 period, industry sales are expected to have increased 7.4%. However, regional sales changes for the period ranged from a gain of 18.0% in the Mountain region to a loss of 15.7% in the New England area. From the more detailed figures found in the NAPL State of the Industry Report, Seventh Edition, it is evident that the commercial printing industry is not only experiencing structural changes that are fundamentally redefining the industry, its geographic landscape is also being altered.

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.

Leave A Comment