The Q1 profits data from the Commerce Department had a couple of surprises. First, the profits that we thought we had in the fourth quarter of last year were gone with a data revision. Oh well. All government data are released on a preliminary basis. They create these estimates based on historical patterns and then supplement that with tax data, especially Social Security tax filings that are the basis of many employment reports. By the next time the report is released, their data revisions are based on more actual data than the original estimate. Unfortunately, these profits data bounce around a bit. This isn't the first time that our excitement over good news was swept away as the data were cleaned. Our industry has had a tough time, and it hurts when the data rug is pulled from under you.

Before we get too excited, we do have to remember that printing shipments are still declining, and prices are flat or declining, which means they're not keeping up with inflation. Paper prices have an upward trend, and postal fees have no connection to reality (that does not mean that they are wireless) when one considers the constantly declining costs of computer and communications equipment, and the running costs of those devices has been declining for years. So where do the profits come from? I talk about it in the report which you can listen to below (if you can stand all 20 minutes or so of the audio). Basically, printers have finally gotten ahead of the decline in terms of workforce reduction that is faster than the decline in demand, grabbing the business volume of their dearly deceased weakest brethren, and the effects of “tuck-ins” that make far more sense in this uncertain market than outright mergers and acquisitions. There's lots more in the audio... enjoy! * * * THE LINKS TO THE AUDIO, SLIDES AND SPREADSHEET ARE AT THIS ADDRESS The press release about the report is at