Recession: Yes, no and how bad?
Mark Spaulding, Editor in Chief -- Converting Magazine, 5/1/2008 2:00:00 AM
Our Website Poll earlier this spring showed among respondents that there's no real consensus when the recession will officially start in the US economy...or if there will even be an actual recession this year. About a quarter (26%) said, “Yup, we're already in it.” A little more than 30% said it would start, oh, last month in the second-quarter of 2008. Only about 16% said it'll start in the second-half, but the remaining quarter of respondents said we won't have a true recession this year, just a general slowdown.
The latest government stats say the economy still grew by 0.6% in the first quarter—the same growth as in Q4 of 2007. For many people, that might as well be zero, especially when job-loss numbers are thrown in.
What can we make of these poll results? Well, it seems to show that most converters agree business will decline in 2008. How much of a decline remains to be seen, though. It does come down to the direct impact any decline has on your company, its markets and your employees. Sort of like that adage that “If your neighbor loses his job, it's a recession. But if you lose your job, it's a depression.” One company's slowdown may be another company's downfall.
By whatever name you want to give it, the slowdown from levels of a year ago is definitely starting to affect your business. According to another Website Poll from late April, nearly two-thirds of you said that it's having a significant or moderate impact on your package-printing and/or converting business. Nearly one in eight said the effects are mild right now. On the other hand, about a quarter of you agreed with the statement, “What economic slowdown?” when given a choice of responses, basically saying “No impact.”
Beyond being a kind of barometer for how things are going, this poll may show the early signs of a real recession. Because our business is far enough up the supply chain, if CPGs and other customers are cutting back now on packaging, they're forecasting primarily consumer purchase cutbacks down the line—a real red flag for a recession. Fortunately, the opposite is true. If your business picks up again this summer—or hopefully doesn't decline at all—that should be a sign of better times to come.
Most economic crystal-balling I've heard indicates that there should be some boost from the Economic Stimulus checks going out now. But after that, it's anybody's guess. Are the Stimulus checks just putting off the inevitable and growing the federal budget deficit unnecessarily? Or are you in a pretty recession-proof position? Let me know.
If we must endure a recession, the shorter and shallower, the sweeter.
Three questions. Your answers?
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