Growth Pace to Remain Moderate

As the presidential campaign heats up, so will the conflicting rhetoric about the state of the economy. Some will tout how far we’ve come from the depths of the recession. Others will postulate how we should be doing much better and highlight the dangers that are looming on the horizon. Who’s right? Under current circumstances, a case can be made that both narratives are. The economy has come a long way. GDP and employment are rising, albeit moderately. But, in comparison to the recent sharp declines we’ve experienced, progress has been significant. Nonetheless, we have done better in previous recoveries and there is little doubt that major problems are looming on the horizon. Although both camps can point to supporting data, this does not answer a key question: Where do we go from here?

According to Blue Chip Economic Indicators, the consensus forecast calls for growth rates of 2.3% and 2.5% in 2012 and 2013, respectively. Growth remains below its long-term trend of 3.0%, but is infinitely better than the 3.5% decline recorded in 2009. Employment on nonfarm payrolls has risen almost 3.3 million during the 24 months ended April. Again the increase is moderate, but a substantial improvement from the 7.8 million jobs lost during the previous 24 months. Is the glass half full or half empty? What are the implications for the printing industry?

Currently, a moderate recovery is taking place in commercial printing. The NAPL Printing Business Index™, our most comprehensive measure of industry activity, has been above the 50.0 threshold (signifying a majority of the companies we survey report business is picking up) since November 2010, with readings averaging 52.5. The latest reading of the PBI, in April, stood at 53.7. While the business environment still is characterized by inconsistency and uncertainty, there is little doubt that we are in a recovery mode. In March 2012, 52.0% of the NAPL Printing Business Panel reported sales increasing over the year before. Over the past 12 months, those reporting monthly sales increases have averaged 53.1%. To provide some context, during the first half of 2009, the percentage of Panel members reporting monthly sales increases averaged just 21.6%.

Here’s what a moderate growth pace means for the commercial printing industry. Those holding on to the remnants of a “recession” mindset need to shed it. To a significant degree, growth will depend on our own initiatives. The same applies to those waiting for a “strong economy to make everything right.” While chances of a double dip have faded, the pace of economic growth is likely to remain moderate. And even if per chance it accelerates, there are no guarantees everyone will participate. A good economy is not going to negate the structural issues that continue to redefine the commercial printing industry. Issues that one must either prepare for, or risk being left further behind.

Andrew Paparozzi Joseph Vincenzino