By Andrew Paparozzi
In April 18, 2008

The April release of the Federal Reserve’s Current Economic Conditions (commonly referred to as the beige book) contained few surprises. The report, which compiles separate reports from the 12 Federal Reserve Districts, generally noted that the economy was weakening. Among the overall characterizations were: a softening in consumer spending, anemic residential construction and real estate, slowing commercial real estate, a mixed bag for manufacturing, and we all know about financials. Some sectors displaying more positive tones, tourism, health services, agriculture, and energy. Other general observations: labor markets are weakening, increases in input prices were widespread, and rises in selling prices were smaller. Is this a recession?

Officially, we wont know for a while. The National Bureau of Economic Research (NBER)— the organization that dates the peaks and troughs of U.S. business cycles—is not likely to make a call until latter this year or sometime in 2009. The committee views a recession as, “a significant decline in economic activity spread across the economy and lasting more than a few months.” Note that their call is not based on the quarterly GDP results, but rather on a set of underlying monthly data regarding economic activity, employment, personal income, etc. There is no set formula or weighting—it’s a judgment call by the NBER’s Business Cycle Dating Committee.

One of the indicators the committee looks at is an augmentation of monthly data underlying GDP compiled by Macroeconomic Advisors, LLC (an economic forecasting firm based in St Louis). These data tend to be quite volatile with extensive revisions. Nonetheless, data for February indicated a sharp decline. When viewing these data together with data on payroll employment, the peak of the latest business cycle may have been January 2008. When will we know? Not until later this year. When will we reach the trough (bottom)? That’s a question for another day. However, as we’ve been emphasizing at NAPL, whether we’re officially in recession or not shouldn’t be your primary focus. The focus should be on: How is the weak economy impacting us? What are we doing about it? How are we preparing for the upturn?

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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