Build Up in Down Time

Saying that 2008 ended on an unsettled note may be the mother of all understatements, but it is the most meaningful way to characterize the economic outlook for 2009. And, bad news for the economy is worse news for printing industry sales. As recently as September, the Blue Chip Economic Indicators consensus forecast projected the American economy to grow 1.5 percent in 2009 but, by November, it was calling for the economy to contract by 0.04 percent, according to Andrew Paparozzi, chief economist and vice president of the National Association for Printing Leadership (NAPL).

The public face of the problem is major banks having to be bailed out, people losing their homes and auto industry chief executives calling on Washington, hat in hand. To economists, though, it is the negative trend in traditional economic indicators—such as consumer spending, housing prices and unemployment rates—that tell the tale. “Those numbers have consistently been coming in much weaker than expected,” Paparozzi said.

Is there any sense in rehashing the obvious, that things look bad? One reason is to convey the degree to which things are different this time. Another is to underscore the need for printers to be proactive, rather than just looking to survive until the turnaround comes.

“What we are seeing is, in many ways, unprecedented,” added NAPL’s chief economist. “No one knows how deep this downturn is going to go, how long it is going to last, or how strong or feeble the recovery will be when it comes.”

While the economy is very weak, the headlines have been “full of economic hyperbole,” pointed out Ronnie H. Davis, Ph.D., Printing Industries of America’s (PIA) chief economist. Making comparisons to the Great Depression solely on the basis of big declines in the stock market gives the impression that other measures of economic health are equally bad, he explained. However, the numbers for real GDP (gross domestic product), personal consumption, industrial production, unemployment and inflation have all remained several magnitudes more positive in 2008 compared to the period from 1929 to 1934.