Unusually Uncertain—Maybe Not

By Andrew Paparozzi
In August 25, 2010

Uncertainty has become the new catchword to explain why the economy hasn’t turned out exactly as expected. Why hasn’t the private sector created more jobs? Why is the housing sector remaining weak? Why isn’t confidence returning? Why has the pace of economic activity slowed? The latest revisions on GDP from the Bureau of Economic Analysis (BEA) tend to reinforce that sentiment. Growth in inflation-adjusted GDP slowed to an annual rate of 2.4% in the second quarter, after rising 3.7% in the first. Available data suggest that when revised second-quarter results are released this Friday, they’re likely to be even lower. Furthermore, revisions back to the first quarter of 2007 depicted a steeper downturn, followed a more subdued recovery. The landscape of numbers may have changed, but the overall message didn’t: The economy experienced a significant downturn—the worst since the late 1940s—and is now experiencing a modest sub-par recovery characterized by widespread uncertainty among businesses and consumers alike.

According to the latest data from the NAPL Printing Business Panel, there is little question that recovery in the printing industry has been erratic. We’re moving towards growth, but at a slow and inconsistent pace. When asked about their concerns heading into the second half of 2010, more than 8 in 10 (81.6%) NAPL research participants cited the economy—the largest citing by far. Following were rising health care costs and maintaining profitability, each with citings of 57.4%. Rising costs of business (taxes, regulations, etc.) and uncertainties about policies from Washington came in fifth and sixth with citings of 39.8% and 37.3%, respectively.

Federal Reserve Chairman Ben Bernanke described the economic recovery as “unusually uncertain” in testimony before Congress earlier this month. While Chairman Bernanke has significant evidence to justify his assessment, given what has and may still come out of Washington, is the degree of uncertainty really that unusual or is it to be expected? Legislation typically has unintended consequences. When you start passing 2,000 page bills on major policy issues, the scope of unintended consequences is likely to be magnified. Is it any wonder why many in the business community are adopting a wait-and-see position? But does such a posture have unintended consequences of its own? For a further discussion on this question, see the upcoming issue of the NAPL Business Review.

Andrew Paparozzi        Joseph Vincenzino        Kong Lue 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.

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