COMMERCIAL PRINTING OUTLOOK — PRINTING WORK TO RUN SHORT
THERE’LL BE a slight hissing noise behind the strains of Auld Lang Syne at New Year’s Eve celebrations this year. It’s the sound of some steam going out of the economy. The slowdown in GDP growth isn’t expected to turn into a recession, but it will have an impact on printing industry sales growth. The one standout will be growth in digital printing.
While it continues to use the Blue Chip Economic Indicator Consensus in its forecasting, NAPL’s Printing Economic Research Center (PERC) is now making that number the upper bound of its economic outlook range, reports Joseph Vincenzino, senior economist. PERC’s analysis had begun pointing to a coming slowdown in the economy starting in late 2005, but the Blue Chip Consensus remained much higher, the economist notes. “It has now moved closer to our view of the economy.”
For 2007, the consensus is projecting the U.S. economy (GDP) to grow by 2.5 percent, Vincenzino says. “We still think there’s risk to the downside, so currently we are using 2.0 percent as the lower end of our 2007 outlook, for a range of 2.0-2.5 percent (adjusted for inflation),” he continues. “The downside risk is mainly due to weakening of the housing market and the resulting impact on consumer spending.”
Looking at the Numbers
Even the more optimistic number is still down significantly from the projection for 2006, which is going to come in at about 3.3 percent growth in GDP, Vincenzino notes.
“Consumers can’t continue spending the way they have mainly because they’ve been using home equity loans to fund their buying, and that source is going to dry up somewhat,” cautions the economist. “Also, the savings rate has been negative for almost a year now. We think it’s going to at least come back to zero; that will have a large impact on consumer spending.”