Q4 Economic Webinar with Dr. Joe Webb

WhatTheyThink
Economics & Research Center

Economic Outlook
Webinar

This program will begin at 2 PM EDT

Presented by:
Dr. Joe Webb, Director
WhatTheyThink
Economics & Research Center
September 24, 2008
Sponsored by
Hosted by WhatTheyThink
Sponsored by MindFireInc
www.WhatTheyThink.com
© 2004, WhatTheyThink.com

Agenda
 The latest fun & games
 First look at 2009's economy
 Technology trends to watch for in 2009 and 2010
 Our Readers’ View:
Latest Economic & Research Center Survey Results
 Fall into Fall with Dr. Joe's Reading List

© 2008, WhatTheyThink.com 2

The Overall Economy:
Y/Y GDP is the real story
 Real GDP
on a Y/Y basis
 2006q3 2.4%
 2006q4 2.4%
 2007q1 1.3%
 2007q2 1.8%
 2007q3 2.8%
 2007q4 2.3%
 2008q1 2.5%
 2008q2 2.2%


Can we believe the economic data?
 Inflation adjustment in PCE (the way GDP is adjusted) is not
behaving properly on US data, imports, and exports
 PCE (Personal Consumption Expenditures “deflator”) uses the CPI and
adjusts based on the volumes of purchases
 CPI is a fixed market basket of thousands of goods, regardless of demand
 PCE underestimates inflation effects and therefore may overestimate GDP
 Rapid changes in prices create data havoc, no matter which
direction
 It’s a reminder that we should not be preoccupied with short-term
data that are always subject to revision months later
 Government statisticians will get it right – two years from now


Leading Economic Indicators

Source: The Conference Board
Chart: Dallas Federal Reserve


Housing Sales

Source: Bureau of the Census


Initial Jobless Claims and
Unemployment Rate

Source: Bureau of Labor Statistics,
Department of Labor


Federal Reserve Economy-Wide
Industrial Capacity Utilization


Yield Curve

Source: Federal Reserve Board


Real Value of the Dollar

Source: Dallas Federal Reserve


Exports and Imports


Consumer Sentiment and Confidence


Unemployment Rising


Q. Recession or Not?
A. Worse
 Recession  No Recession
 The press has declared a  Only Q4-07 was negative,
recession, so therefore… and barely so
 Still at full employment,
 Housing stinks and will get worse even though at high end
 Financial crises, huge government  Exports are growing
bailout  Fed won’t raise rates
 Banks are not lending  Lower commodities prices will add
to GDP and economic activity
 Unemployment getting worse  Housing was a regional bubble and
 Auto sales are bad some markets are improving
 Inflation above historical rates  Financial crisis on way to being
solved
 Commodity prices starting to  Capital gains still at 15%
decline, indicating slowdown


Real Issues
 Stagflation: slow growth, high inflation
 Fed backed into a corner of its own making
 Mortgage markets sluggish, still settling out
 Taxes will rise, dampening investment
 Net present value of projects have higher thresholds because of higher taxes and
higher inflation
 Weak dollar (on a long-term basis) reduces interest in foreign direct investment
 Waiting for dollar to stabilize or reverse course
 Tax rebates were illusionary, and another stimulus package
will be even more inflationary
 Productivity > real GDP, means employment will not increase
 Economic sense continues to suffer in this political year, and can
take a while to unwind, considering recent banking problems


Bottom Line: A Very Difficult Job for All
Industry Executives to Navigate
 Not a true recession, but it will definitely be called one
 Real GDP for the 2009 may be below 2%
 Q2-08 was 3.2%, revise to 2.2%?
 Inflation for the 2008 will top 5%, 2009 as much as 5.5%
 Unemployment has reached 6%, and can go to 6.5% easily,
or even higher in 2009
 Workforce growing faster than normal population growth as households send
second and third workers into workforce
 Fed will have to put the brakes on easing in 2009 to control inflation,
but may not be able to
 Oil price is still much higher than last year despite (temporary) pullback


Commercial Printing

Sponsored by

What the Market is Telling Us
 Not getting good signals from content-creation
employment data
 Media shift still ongoing despite media budget cutbacks
 Monthly changes in print volume accelerating
to the downside; Q4 looks weak
 Business conditions data indicate “Tale of Two Cities”
split, which is usually signal of shakeout and
upcoming credit problems


Employment Continues to Weaken,
Even in Content Creation


Updated U.S. Commercial Printing Forecasts
(in August 2008 $)
 Conservative model:  GDP model
 2008: $100.9B  using +2.5% GDP
 2013: $82.5B real growth rate
 2008: $103.1B
 2012: $96.2B
 Aggressive model:
 2008: $96.8B
 2013: $60.2B  WTT ERC forecasts
 2008: $97.0
 2013: $78.0B


Newspaper Industry Woes Not Being Cured by Online Revenues
Inflation-adjusted ad dollars, annualized as 4-quarter moving totals
$70 based on data from Newspaper Association of America, www.naa.org and the Bureau of Labor Statistics
© 2008, WhatTheyThink Economics & Research Center

$60
Print
Online
Total
$50

$40

$30

$20 Online ad revenues
now 7.6% of total,
$3.3 B, growing <6%

$10

$-
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2006 Q4

Make Sure Growth is Real
 Stay aggressively ahead of costs by changing procedures,
workflows, tools
 Penny-pinching is meaningless, creativity is priceless
 Latest multipliers to compare years in August 2008 dollars
 2003: x1.187
 2004: x1.156
 2005: x1.116
 2006: x1.074
 2007: x1.054
 2008: x1.000


Commercial Printing
Survey Results

Sponsored by

Who Responded?
 Principal data target: 344 U.S. Commercial Printers
 Well-distributed across all employee size classes and
subclasses
 Representative of WhatTheyThink commercial printer
subscribers
 Collected data from in-plant printers and other segments
 To appear in columns, audio charts of the week
and special reports
 Data projected to marketplace using stratified method


How 2008 compares to 2007 for
U.S. Commercial Printers


What are the top three or four issues that
companies like yours must face in 2009?


What are the top three or four issues that
companies like yours must face in 2009?

The “bottom items”


What areas are you emphasizing to deal
with the slower economy?


Content Creation
Survey Results

Sponsored by

What designers have been working on
in the last six months


What ad agencies have been working
on in the last six months

Note: mid-size and large
agency data not projectable


Graphic Designers – Media that will
grow by more than 10% in their work


Ad Agencies -- Media that will grow by
more than 10% in their work


Tech Trends to Watch
in 2009 and 2010

Sponsored by

“Computer-phones” to be
more than just the iPhone
 Google Android
 T-Mobile phone now released
 The Android project and
the Open Handset Alliance
 Companies and organizations involved:
 Broadcom, China Mobile Communications, eBay, Google, Intel, LG
Electronics, Marvell Semiconductor, Motorola, NTT DoCoMo,
Nuance Communications, NVIDIA, Qualcomm, Samsung, Sprint
Nextel, T-Mobile, Texas Instruments, many others


http://www.msnbc.msn.com
/id/26510338/


Rise in “netbooks”
 Numerous small
notebooks from Asus,
Dell, others
 Usually Linux or
Windows XP-based,
uses Intel Atom


Mobile books and other media
 E-books will have a major move
 Amazon Kindle: new size to be out soon
 Designed for the textbook market
 Sold more than 250,000 of current model
 Esquire’s e-paper stunt
 “Mobile Media” will be relatively small market compared
to others, but will become part of daily information and
entertainment access


Web 2.0 (whatever that is) grows
 Social networking continues to move beyond its younger
audience
 WSJ and NYT have added social networking in last 2 weeks
 More people using computers as “thin clients”
 Collaboration media go mainstream
 Market segments get smaller and smaller; the need to
brand and use multiple media grows larger and larger
 Public relations continues to be key area


Dr. Joe’s Fall
Reading List

Study hard!
Tests to be Given During Graph Expo

Sponsored by

Dr. Joe’s Fall Reading List
 How media are used by 21 different B2B segments,
an American Business Media survey
 Annual Veronis Suhler Stevenson communications
markets forecast summarized in their press release
 Graphic Design USA survey of designers… their verbatim
comments are priceless
 Microsoft’s PC ad campaign? Produced on a Mac!


 Financial Times:
Greenspan’s Sins Come Back to Haunt Us
 LA Times sues its new buyer: why it’s a bad idea
 Good discussion of what ails the newspaper biz
 Investor Mark Cuban tells newspapers to declare bankruptcy
 New York Magazine: Is the Book Business at its End?
 B2B: Why Custom Publishing is Staying Strong
 Pew Internet Survey: Games and Civic Involvement
 It’s not what is commonly thought


 Price Waterhouse Coopers State of Publishing and Media
Report
 Access to summaries
 News article about it
 Offline media (“out of home media”) discussed by
New York Times
 E-mail gaining in utility among marketers (DM News)
 Best implementation of digital magazine I have seen
 The Sporting News according to Texterity’s implementation


AdWeek: The Real Digital Revolution
 … the real digital revolution is about consumer empowerment, the ability to
research and learn about products and services and make decisions
independently from, and in spite of, any sort of advertising messages.
 …quot;Theyquot; are talking about us and we can't butt in. … Until recently, the
paradigm went something like this: Ad leads to purchase. Nowadays, it goes
like this: Ad leads to Google leads to purchase. That's seismic.
 Car companies are among the ones hardest hit by this shift… consumers [are]
turning in droves to review sites, message boards and the like, to get the real
story on the vehicles they plan to buy -- even to find out what kind of cars
someone like them should plan to buy…
 That's a pretty shocking development in a market that was shrouded in mystery
and misinformation for years and where consumers had nothing more to rely
on for information than the materials the car companies issued.


 How they date recessions at the NBER
 How the Consumer Price Index works:
the BLS answers its critics
 World Bank data resources
 Dr. Joe’s free software list


Other Dr. Joe Items
 Dr. Joe on the road… go to “the sightings” page on
WhatTheyThink
 Dr. Joe and Richard Romano have rewritten “Renewing
the Printing Industry.” It’s now available at no charge as a
free download thanks to our sponsor MindFireInc.


Thank You
to MindFireInc!

QUESTIONS?
Mark Your Calendars:
Next Economic Outlook Webinar
Sponsored by
Hosted by WhatTheyThink is December 10, 2008

Audio Chart of the Week - FREE
 Chart of Industry Trend
or Topic
 Weekly
 3 to 6 minutes
 Wide range of topics from
content creation and technology
to end-use markets and more
 Use the chart in internal
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Management, Marketing,
and Economic Notes - FREE
 “Blog”-like comments about
latest news
 A lot happens between
weekly columns
 Sometimes I just vent
 “Road Warrior”
 Comments and
recommendations about
personal computing and
communications technologies


Economics & Research Center - FREE
 ERC Industry Snapshot
 Updated just hours after new
industry data are published
 Data
 Shipments, capacity
 Imports/exports
 Employment
 Postal weights and pieces
 Markets
 Content creation & printing
 Paper
 US & Canada


In Search of Dr. Joe… and others…
 WhatTheyThink.com
 “Mondays with Dr. Joe”
 Economics & Research Center (ERC)
 ERC Notes
 ERC Industry Snapshot
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 Economic and other webinars


Q4 Economic Webinar with Dr. Joe Webb

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