HOT MARKETS FOR 2006 — NEW YEAR CELEBRATIONS
Ready to roll, presses in 2006 will be driven two-thirds by “now-or-never” consumer spending and first-in-history “wealth effect” redemptions of real estate. Previously sidelined intergenerational wealth, plus inbound repatriation of a more than $800 billion trade deficit, will push gross domestic product (GDP) growth to more than 6.5 percent, versus 3.8 percent growth in 2005 and 4.4 percent in 2004.
A whopping $13.1 trillion should be the unprecedented GDP! More than one-half of both the consumer spend and the trade deficit proceed will likely be related to real estate (HM ‘06 Number 4) which, arguably, is not real product growth, but rather a hedge disguised as GDP. Print is blind to the distinction, so hold on tight.
We’re in for 5 percent or greater sales growth, and a return to gross margins in the 30 to 35 percent range. This is if we follow the “Hot Markets” road and confine sales efforts to very specific sector opportunities. There is urgency because a mid-cycle slowdown looms in ‘07 when the economic stimuli of recent natural disasters fade, and home equity lines of credit (HELOCs) peak at 4 percent of GDP. The real estate bubble will finally burst under the weight of a 1.3:1 personal debt/income ratio.
Ranked Number 1 is publishing/non-newspaper ($109 billion, +6 percent; with $14.2 billion to print, +2 percent). Professional and educational books ($3.6 billion to print, +4 percent) lead the category. Juvenile, adult trades, CDI and religious ($2.6 billion to print, +6 percent) are growing with blockbuster books and something new: adult picture books—”a union of the simple pleasures of reading and art.”
Harry Makes His Mark
After a year of record runs, led by the 13.5 million first printing for the sixth Harry Potter book (265 million books worldwide to date), the juvenile segment will likely drop back. Periodicals ($6 billion to print, -4 percent) will recede following an ad-page spike in ‘05.
Vincent Mallardi, C.M.C., is a the chairman of the Printing Brokerage/Buyers Association International (PBBA) and is a Certified Management Consultant in the paper, printing and converting industries. He is also an adjunct professor in economics. Contact him via email at email@example.com