COVID-19 Economic Impact on the Printing Industry
Add unprecedented monetary stimulus from the Fed. There is quantitative easing and support for the commercial paper markets and repurchase markets that are so important to public corporations. There’s support for money markets, the Exchange Stabilization Fund (an emergency reserve fund to stabilize the international value of the American dollar), and essential global supply chains. The Fed is even lending directly to American businesses, acting as a commercial bank as well as a central bank. Their policies are arcane and go by long names such as Term Asset-Backed Securities Loan Facility and Primary Market Corporate Credit Facility. But they are just as important as fiscal policy: Without the Fed’s aggressive actions as lender of last resort, both domestic and global markets credit markets would have seized up and we’d be heading into depression.
All this aid and stimulus will contribute to recovery. Some prominent economists expect recovery to begin next quarter, as social distancing and warm, humid summer weather slow propagation of COVID-19. But that’s increasingly unlikely, given how deeply the pandemic has damaged the economy. Based on the best information available — and that changes daily — the most favorable outcome is contraction slowing in the third quarter, with recovery beginning in the fourth quarter and accelerating in 2021.
And we aren’t heading for depression. We’ll see depression-like numbers this quarter — but not much longer. That’s why annualizing second quarter rates, while valuable for showing how deeply COVID-19 has shocked the economy, is misleading. Contraction at those rates would only continue for a year if we were not doing anything to combat COVID-19 or to stimulate the economy. Comparisons with the Great Depression are also misleading: Back then, unemployment rose to 20% for four years, not for four months. Unprecedented fiscal and monetary stimulus will kick in. And as noted, the superior testing on the way will be a game changer.
Andrew D. Paparozzi joined PRINTING United Alliance as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.
Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.
Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.