Commercial Printing Outlook — Tepid Vote of Confidence
BLOODY MARY, Bloody Mary, Blood. . .Wait, does the curse still hold if one simply writes her name three times?
Economists seem to have developed their own urban legend about the “R” word. There’s a fear that simply saying the word “recession” out loud will be enough to cause one to happen.
In a sense, though, that may be true. Consumer spending has been a big part of what’s kept the United States economy going as well as it has been. How people feel about their personal situations today and their prospects in the near term—or consumer confidence—has a strong bearing on their willingness to spend and incur debt. If consumers hear enough discouraging news and warnings about the potential for a recession, it could become a self-fulfilling prophecy.
So far, the consensus outlook sees the U.S. avoiding the “R” word (best to play it safe). There are enough business and geopolitical conditions still in play, though, to keep that a definite possibility.
Since the printing industry still tracks with the direction of the general economy, the outlook calls for slower sales growth in 2008. Slow is better than no growth, so the real cause for concern may be the trend in profits. Printers continue to bear cost increases they have difficulty passing through to clients.
Despite the challenges, total printing industry sales should finish up around 2.5 percent (maybe slightly higher or lower) in 2007, says Andrew Paparozzi, vice president and chief economist for the National Association for Printing Leadership (NAPL). “We’re looking for 1.5 percent to 2.5 percent sales growth in 2008.”
There may be a greater likelihood of industry sales trending toward the lower half of that range—1.5 to 2 percent, the printing industry economist continues. The broader economic outlook is the reason to be bearish.
“The economy, although likely to avoid recession, has clearly slowed and is feeling the effects of all the things in the headlines,” Paparozzi explains. Chief among these are the excesses in the mortgage markets that have created difficulties in the financial and housing sectors. Then there’s rising gas prices, consumers feeling insecure about the future and continued unrest in spots around the globe.