Commercial Printing Outlook : Forecasting a U-turnDecember 2009 By Mark Smith
AS THIS issue was going to press, a revision to the third quarter GDP estimate was released that lowered the quarter's growth rate from 3.5 percent to 2.8 percent. The higher number figured prominently into the forecasts offered by both of the printing industry association economists interviewed for this story. It was seen as cause for optimism because expectations had been for a growth rate below 3 percent.
Significant revisions to economic data certainly are nothing new, but this year come on top of "historic" and "unprecedented" being two words thrown around a lot in discussing the state of the economy and printing industry sales. More- so than ever, the value of forecasts this year is likely to be in the trends and underlying factors they identify rather than any specific numbers given.
In the vernacular of economists, the outlook is for the United States to continue seeing a "U"-shaped recovery from the Great Recession. While the economy has bottomed out and the decline stopped, there will be a wide and slow up-slope to the recovery, such as it is.
"Six or eight months ago no one knew when the free fall was going to stop. Very few people expected the economy to grow in the third quarter of 2009," notes Andrew Paparozzi, NAPL's chief economist and vice president. The strong growth for the quarter provided additional evidence that the absolute worst-case scenario was not going to be realized and showed the economy is indeed healing, he says. "We've put a bottom under it."
The bad news: The latest estimate from the Blue Chip Economic Indicators report still calls for the GDP rate to be down 2.5 percent in 2009, Paparozzi continues. "That is the largest single-year decline in GDP since 1946."
Printing industry sales for 2009 should come in somewhere between -14 percent to -16 percent, more likely closer to -16 percent, adds the chief economist. "That's on top of a 4 percent decline last year. We're looking at a 20.6 percent decrease (in printing sales) from the peak in the second half of 2007 through September 2009."
Reading the Signs
Weeks before the announcement came, the possibility of a downward revision in the third quarter GDP numbers was already being considered by Ron Davis, Ph.D., and Printing Industries of America's (PIA) chief economist and vice president. "Fourth quarter growth may slow down to a little less than 3 percent, but that's really good compared to declining 3 to 4 percent like the economy had been," he notes. "In 2009, we're going to be down 3 to 4 percent again in terms of nominal (not adjusted for inflation) printing shipments."