Commercial Printing Outlook : Healing Light Cast on 2011
Haunted by Excess
Keeping tax rates at their current levels is factored into his now more optimistic "likely" scenario, but not any additional cuts. Davis would also like to see some moratoriums on new regulations and maybe the Environmental Protection Agency backing off enactment of cap-and-trade regulations on carbon emissions.
There's no question that the economy is healing, agrees Andrew Paparozzi, NAPL's chief economist and vice president. "Any indicator you look at—whether it is employment or GDP, consumer spending or industrial production—is noticeably and meaningfully stronger than it was a year ago. But it is a painfully slow and maddeningly inconsistent process because we created such severe excesses. There's simply no easy way to purge those excesses. It is happening, but it's going to take time."
Rather than the election results, Paparozzi believes the response of the new Congress and President Barack Obama to the Bowles-Simpson Deficit Reduction Plan will be the real indicator of any positive impact on the economic outlook.
"Right now, the election is a non-factor because it didn't prove anything," he asserts. "Everyone knows what has to be done. The question is: will they work together to craft a credible plan for getting it done? The response to the deficit reduction commission will be our first indication of whether anything has, in fact, changed, rather than simply shuffling a bunch of seats around."
The latest Blue Chip Economic Indicators forecast is for 2.7 percent growth this year and 2.5 percent in 2011, notes NAPL's economist. "Those numbers are very, very weak for the first year of recovery from a very deep recession. Normally, the deeper the recession, the stronger the first year or two of recovery simply because of the pent-up demand that is created and then released early in the recovery."