Skirting Recession—So What

By Andrew Paparozzi
In June 20, 2008

Will the U.S. economy skirt a recession? We very well might. Less than half of the participants in Blue Chip Economic Indicators see the economy currently in or sliding into recession. A composite index of leading economic indicators published by the Conference Board rose 0.1% in May, following a similar increase in April. However, lets not pop the champagne, not just yet.

At best the economy is quite weak and not likely to record any significant recovery for some time. The Blue Chip consensus shows the economy essentially flat in the current quarter, with an expected increase in GDP of just 0.4%. GDP growth adjusted for inflation is not expected to increase faster than 2.0% until a year from now. And 2.0% does not exactly signal a great economy. If these are the results, the National Bureau of Economic Research (NBER) may not designate a recession. However, keep in mind that these data are subject to revision, so we’re not going to know for some time.

In any event, focusing on the “recession/no recession” argument misses this key point—a weak economy and rising costs are exerting downward pressure on profitability. This is definitely true for printers. Over 43.0% of the NAPL Printing Business Panel reported in April that pre-tax profitability was decreasing—the highest such reading in almost 5 years. But it’s also true economy wide. In other words: It’s also true for your current and prospective clients. Initial estimates show a sharp falloff in pre-tax corporate profits in the U.S. for the first quarter compared to a year ago. In this difficult economic environment, your clients are facing challenges. How can you help them?

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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