On the Mend
The latest data provide glimmers of hope that the economy is finally gaining some traction. By most accounts, the holiday shopping season was a success. In addition, the Bureau of Labor Statistics (BLS) reports that the economy had a net gain of 200,000 jobs in December on nonfarm payrolls, with a gain of 212, 000 in the private sector. For all of 2011, there was a net increase of more than 1.6 million jobs—almost double the increase during 2010. The unemployment rate, which is based on a different survey, fell to 8.5% in December—its lowest level since February 2009. Weekly data on initial unemployment claims continue to trend lower. Other anecdotal evidence further suggests that the business climate has taken on a slightly better tone—we even may be seeing early signs that the housing market may be bottoming. In perspective, the numbers are not great. They may not even be good. But they clearly show that labor markets, as well as other aspects of the economy, are on the mend. We are not sliding back into recession anytime soon.
What’s this mean going forward? Unfortunately, it most likely means more of the same—an economy that’s mending, albeit quite slowly. The latest Blue Chip Economic Indicatorsconsensus forecast shows GDP adjusted for inflation rising 2.2% this year—not great, but better than the 1.7% increase expected for 2011. However, at this stage of the recovery, the economy should be growing by closer to 4.0% or more.
What about printers? What will the business climate mean for them? The economy is getting better, but not to the extent that it’s going to solve everyone’s problems. The recovery is too tepid for that. Preliminary data from the NAPL Printing Business Panel show that the inconsistency that characterized business in 2011 is continuing. As one Panel member noted, “Business is very sporadic, nothing consistent from month to month.”
Furthermore, despite a pickup in sales, profitability remains a challenge. (See the “Profitability Remains a Challenge for Commercial Printers” post in the State of the Industry Analysis section of NAPL Performance Indicators.) And remember, even if the economic recovery becomes more robust than currently expected, many of our problems are related to structural changes—issues that go beyond what a cyclical bump up is going to fix.
So regardless of the strength of the recovery, we should all be asking ourselves what we are going to do to make 2012 a better year than 2011. In particular, what are we going to do to boost sales? And how are we going to protect and bolster the bottom line? As one NAPL State of the Industry participant says so well, “Hope is not a strategy.”
Andrew Paparozzi Joseph Vincenzino