January 28, 2003 -- (by WTT contributing columnist Cary Sherburne) -- In a communication distributed on January 24th, Ronnie H. Davis, Ph.D., Chief Economist for the Printing Industries of America (PIA, Alexandria VA), discussed President Bush’s proposed tax package and its potential impact on the printing industry. Davis bases his comments on the projected impact on the GDP of the proposed tax changes as defined by the Council of Economic Advisors (CEA). According to Davis, "Generally, the package is a very positive mix of tax initiatives that should provide a boost to the economy in both the short and long run. . . . The increase in small business expensing for new investments should help many printers that are in need of updating equipment." The CEA has estimated that implementation of the proposed tax package will increase GDP in 2003 by 0.4%; in 2004 by 1.1% (by far the biggest impact period); and by 0.2% per year during the period 2005 through 2007. Davis maintains that print spending tracks with the GDP, with print markets growing at slightly less than the overall economy. Apply his model to the CEA data, Davis estimates the following impact on print sales over the forecast period: Print Market Growth Impacts (% Change in Print Sales) ------------ Year 2003 Current Trend 2.5 % Revised 2.7 % Change + .2 % ------------ Year 2004 Current Trend 3.2 % Revised 3.8 % Change + .6 ------------ Year 2003 - 2007 Current Trend 3.0 % Revised 3.1 % Change + .1 % Davis comments, "In 2004 the impact of the top line increase of approximately $1 billion in sales should translate to an increase of around $50 million or so in industry profits. This would help to raise industry profitability back to more normal levels." Davis’ full comments are available to PIA members at www.gain.net. ---- Editor’s Note: Dr. Joe Webb has provided a quick take on this news item. Premium Access Members can view this by visiting www.whattheythink.com. Also see “Fridays with Dr. Joe” as he comments on news from the previous week and prepares printing and publishing executives for the week to come.