Complete Story
06/03/2020
Restarting the Economy: What Printing Companies Can Expect
Source: Andrew Paparozzi, PRINTING United Alliance, June 1, 2020
The economic lockdown is easing. Businesses are reopening. There’s pent-up demand for all the things we haven’t been able to do or purchase in months. And unprecedented monetary and fiscal stimulus is in place.
That’s generating a lot of talk about a quick and sustained (V-shaped) recovery, beginning as early as this summer. And that’s where the economy would be headed if the current recession, like past recessions, were just about economics. But it isn’t. It’s about biology and the lingering effects of a global pandemic on human behavior. And it’s about the immense difference between lifting restrictions on commerce and restoring the dynamics necessary to get the complex $24 trillion American economy back up to speed. Consider, for example:
- Even after the lockdown is lifted, social distancing will force major industries such as hospitality, travel, entertainment, events, and retail to operate well below capacity. Moreover, some portion of the public will not return to their pre-pandemic behavior until a vaccine is developed. There is no way to tell if it will be an economically insignificant portion.
- Many businesses are not going to reopen; their losses have been too great. And for many that do reopen, margins will be pressured by limits on operating capacity and rising costs, including the cost of keeping facilities safe and sanitary for all on site.
- There will be costly litigation unless Congress passes legislation protecting businesses from frivolous COVID-19 lawsuits.
- There will be flare-ups of the virus because not everyone is going to follow even basic, commonsense health guidelines.
All of these factors will weigh on the economy, increasing the likelihood of a recovery that follows a U shape with an elongated bottom (because the economy needs more time to rebound) rather than a V shape. There will be periodic bounces off the bottom during the second half of 2020, but a sustainable recovery that convinces companies to boost capital investment and consumers to boost spending on nonessentials isn’t likely until 2021.
Big Upturn Expected
What is likely: The upturn will be big when it comes. The consensus of economists surveyed by The Wall Street Journal expects GDP to grow 5% next year. That would be the economy’s most rapid advance in 37 years and more than double the 2.3% average annual gain during the last decade. In contrast, GDP is expected to decline 6.6% this year, the steepest since 1946 and more than twice the 2.5% decline in 2009, at the depths of the Great Recession.
