Published: April 28, 2016
Everyone knows that the stock market is up from its lows at the bottom of the recession,but one obscure but key measure underscores how sluggish the economy has been. The S&P 500 should have a bias of steadily increasing revenues. It has most of the best companies in the world, with international presence in the globe's growing markets and a foundation in the established ones. It is rare for companies to be dismissed from the S&P 500, but companies are added all the time. When S&P companies merge, they create a new entity of combined revenues, and another company is added with new revenues to add to the index. The other upward bias should be the high level of stock buybacks buy these large companies, as they borrow money at low interest rates and create “shareholder value” by reducing the number of shares and increasing the value of each share of stock. We've called this cowardly, as it increases earnings per share (EPS) without needing to increase total profits. So this revenue per share should be steadily increasing with a growing economy in a recovery that started in mid-2009. It seems that companies have done a much better job of financial engineering than they have in creating revenues.
Published: April 21, 2016
Economic data have been conflicting of late, but there is one consensus in the data that is clear: the small business economy did not recover from recession, and looks like it’s back in recession territory. There are many indicators we use for small business but one that is watched often is that of the NFIB. It is published monthly and has a long history. US government data focuses attention on the largest businesses because they represent big chunks of the economy and report some kind of data, especially payroll data, with great frequency. Think of it as counting whales rather than minnows. Their recent analysis said “The small business sector... is underperforming, doing little more than operating in maintenance mode. Slow economic growth is now just a result of population growth, more haircuts, retail customers, health care patients, etc. But there is no exuberance, no optimism and not much hope, the numbers make it clear.” Economies stuck in +2% growth mode tend to do that.
Published: April 19, 2016
The US Department of Commerce recently released its Annual Survey of Manufactures Capital Expenditures report, issuing data for 2014.
Published: April 14, 2016
This week’s chart shows the aggressive actions of the Federal Reserve after the housing bubble. For decades, the Fed’s balance sheet increased by about 6% per year, averaging about half inflation and half economic growth. The rocket-like rise when the bubble burst is clear, and then the three steps up of each of the quantitative easings are plainly seen. The Fed has wanted to raise rates for some time, but they have also wanted to stop the buying of government instruments that characterized the QE programs. They create shortages of publicly traded bonds which increases their prices, which makes the effective interest rates low. Rather than ending their purchases, the Fed has been replacing matured obligations. In effect, this keeps QE3 going. Can the Fed ever end it? They may hold on and hope that over time that economic growth and inflation catches up to them in time, but that can take forever, or perhaps longer. It will be difficult for the Fed to end its policy without robust economic growth that will give them the flexibility and opportunities to unwind their holdings. Should a recession begin, or a new financial crisis emerge (even an internationally) the Fed might need to create an additional QE effort.
Published: April 7, 2016
The USPS is always in the news, and last month's Annual Compliance Determination report was not particularly positive. “The majority of products failed to meet service performance targets for FY 2015” read the Postal Regulatory Commission press release. The PRC directed “the Postal Service to improve service performance and provide a comprehensive plan within 90 days.”
Published: April 6, 2016
The US Department of Commerce issued its latest report of US commercial printing shipments (NAICS 323) and the data show 21 consecutive months of positive comparisons to the prior year current dollar shipments. The trend started with June 2014, and has been an average increase of +3.3%, +$225 million per month, for that period.
Published: March 31, 2016
Profits bounced back from a terrible third quarter which had an industry-aggregate loss of -2.57% as a percentage of revenues, and went back up to a more reasonable 4.38%. The difference was the massive writedowns of the third quarter which resulted in a -10.97% loss in printing companies with more than $25 million in assets.
Published: March 30, 2016
In a clear case of dealing with a two-handed economist when asked about economic conditions, the Bureau of Economic Analysis increased their estimate of fourth quarter GDP to +1.4%. The initial report was +0.7%, and then it was revised to +1.0%, and now it is +1.4%. They were off only by $100 billion from the first report, greater than the size of the printing industry, just to add some perspective about how big the US economy is.
Published: March 24, 2016
Now that 2015 data are complete, we have run the forecasting models again and present them in this chart.
Published: March 17, 2016
The US Department of Commerce released its latest Quarterly Service Survey last week, and it reduced shipments for the third quarter of 2013 by -$4 billion (whoops – a -15% statistical error).
Published: March 10, 2016
The latest printing shipments were discussed in the “Mondays with Dr. Joe” of March 7. The chart offers more details. Revenues turned around on a current dollar basis with June 2014 shipments (blue line) and the positive comparisons to the prior year kept going until the most recent report, January 2016. In current dollars, January’s shipments were barely above those of 2015, keeping the positive comparison streak intact.
Published: March 1, 2016
The second estimate of fourth quarter GDP was revised up from +0.7% to +1.0%, mainly from an increase in net inventories. This factor in the GDP calculation is volatile, so we track GDP with and without it to get a perspective of the underlying GDP rate from a long term perspective in a year-to-year comparison.
Published: February 26, 2016
In 2014, US per capita hours using broadband is just over 900 per year (2.5 per day), and that's the entire population. The number of total hours has doubled since 2007. The population has grown in that period, but the average number of hours online per week has gone from 15.3 to 21.5 in 2014, and households with broadband connections grew from 76% to 89%. The cumulative effect has had most of its effect on mainstream commercial printing, especially information materials used for promotion and product support and advertising-funded products like magazines and catalogs. Printing's use is becoming more tactical, focused on specialty uses of printed images with higher expectations for impact, especially in concert with other media.
Published: February 18, 2016
E-commerce sales of all types, including industrial products, is still growing at a rate just under 15% per year.
Published: February 11, 2016
Part of print's good 2015 was how well it did compared to other industries. Of 21 major manufacturing industries, nine had positive years in current dollars, with commercial printing as sixth highest. Precipitous decreases in commodities prices caused manufacturing in metals and energy to have such a bad year that the entire manufacturing sector declined -4.3%. For the year, current dollar GDP growth was +2.9%. For the first time in twenty years, commercial printing growth exceeded GDP.
Published: February 4, 2016
Since December 2007, the CPI is up by +12.6%. How have the PPI for commercial printing, ink, and paper changed? Commercial printing prices are lower, -0.8%. This means that a commercial printing business has to increase its productivity and profitability to reward its owners and employees to make up for the loss of purchasing power they have in their paychecks.
Published: February 4, 2016
The monthly recovery indicators were uneven again. The NASDAQ fell almost -7% in the last month, and ISM non-manufacturing new orders and imports also declined.
Published: February 1, 2016
Real Gross Domestic Product (RGDP) for the US increased by an annual rate of +0.7% in the fourth quarter of 2015. On a year-to-year basis, RGDP was up +1.8%.
Published: January 28, 2016
The chart shows the percentage of US commercial printing establishments of all sizes and their responses to the question about the cloud-based services they use today. The question did not ask them their frequency or intensity of use, just whether or not they use it today. Some of the “non-users” may not even be aware that they are using cloud services, since some services run transparently in the background, such as backup services like Carbonite and others. Others may not be aware that they are using a VOIP phone system. Some cloud services such as Dropbox allow customers to brand their service so it looks like a company file sharing site. Generally, larger printers are using more cloud services than others, but the disparity is narrow.
Published: January 21, 2016
Here are data from our survey at the end of 2015 where we asked respondents to identify the status of their companies in terms of consolidation. Generally, formal consolidations are executed by the largest print businesses, and small businesses close their respective shops and reopen a new business with new partners.
Published: January 14, 2016
The latest survey of NFIB shows their index bouncing along the level of the early 2000s recession low, and down from the high prior to the December 2007 recession. Passing that level on the way up would have indicated a completed recovery of this sector but it just couldn't make it that far and break through. Using this indicator that means that small business did not emerge from the recession yet. Big business and the stock markets dominate the headlines, but small business remains the front line of the economy, and its difficulties are often hidden from view as being un-newsworthy. Its breakout above the bottom of the early 2000s recession took some time, and the recent trend in the chart looks like it's getting ready to fall below that again. It dipped below that level briefly a few months ago and climbed back out. Will it climb out again? It's worth watching.
Published: January 7, 2016
For about a decade, many print businesses have marketed themselves as “marketing services providers” with varying degrees of success. Our recent survey showed less than half of print businesses market themselves in this or a similar manner.
Published: January 6, 2016
Are the recovery indicators becoming recession indicators There's enough negative news of late to be wary about the state of the economy, and a lengthening list of geopolitical issues, for sure.
Published: January 6, 2016
US commercial printing industry shipments are up for 18 consecutive months in current dollars compared to the corresponding month of the prior year.
Published: December 22, 2015
The third quarter of 2015 marked a huge divergence in the performance of the industry, according to the Department of Commerce Quarterly Financial Report. Printers with more than $25 million in assets wrote down assets amounting to nearly -15% of revenues. This sent the quarterly moving total of inflation-adjusted profits before taxes to +$1.46 billion.