COMMERCIAL PRINTING Outlook — Shadows Cast on 2006

As for print sales, NAPL now expects industry revenues to grow between 2.5 and 3.5 percent in 2005. That figure will probably gravitate toward 3 or 3.2 percent by the end of the year because of what gains there have been in pricing power, he adds. “Next year we’re looking more at growth in the 1.5 to 2.5 percent range, maybe 2 to 3 percent if market trends are on the more positive side.”

Yield Signs Ahead

With the qualifier that NAPL is not in the business of forecasting the overall economy, its chief economist says the variables that could impact economic performance are weighted toward slower growth.

“We use the ‘Blue Chip Economic Indicators’ consensus forecast, which is still 3.3 percent for 2006. It’s easier to make a case that growth will be lower than that figure, rather than higher,” Paparozzi says.

Ronnie H. Davis, Ph.D., chief economist at PIA/GATF, also sees reason to be cautious in making projections. The hit from two hurricanes (Katrina and Rita) battering the country’s “energy belt” and the resulting up-tick in inflation and unemployment have made the future path of the country’s economy much more uncertain, he explains.

Through the first half of 2005, Davis says the likely scenario seemed to be that the economy would stay on course for continued growth at a rate ranging from 3 to 4 percent through the remainder of 2005 and into 2006. However, developments in the latter part of the year have set up the potential for three different scenarios to unfold, the economist suggests. Clearly inspired by 1960s westerns, he labels these projections “the good, the bad and the ugly.”

* The “good” scenario calls for continued growth in the economy as the built-up momentum withstands the drag of higher energy costs and disruptions resulting from the hurricanes. After slowing only slightly in the last third of 2005, the economy regains its footing by early 2006 as spending for hurricane relief and recovery sets in and the hit from the energy shock subsides. The net result is continued growth of 3 to 3.5 percent with a slight rise in inflation and unemployment.

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