Q4 Economic Webinar with Dr. Joe Webb

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Economic Outlook Webinar

Dr. Joe Webb, DirectorWhatTheyThink

Economics & Research CenterSeptember 24, 2008

Presented by:

WhatTheyThinkEconomics & Research Center

This program will begin at 2 PM EDT

© 2008, WhatTheyThink.com 2

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


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 BoardChart: Dallas Federal Reserve


Housing Sales

Source: Bureau of the CensusChart: Dallas Federal Reserve


Initial Jobless Claims and Unemployment Rate

Source: Bureau of Labor Statistics, Department of LaborChart: Dallas Federal Reserve


Federal Reserve Economy-Wide Industrial Capacity Utilization


Yield Curve

Source: Federal Reserve BoardChart: Dallas Federal Reserve


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

The press has declared a recession, so therefore…

Housing stinks and will get worse Financial crises, huge government

bailout Banks are not lending Unemployment getting worse Auto sales are bad Inflation above historical rates Commodity prices starting to

decline, indicating slowdown

No Recession Only Q4-07 was negative,

and barely so Still at full employment,

even though at high end Exports are growing Fed won’t raise rates Lower commodities prices will add

to GDP and economic activity Housing was a regional bubble and

some markets are improving Financial crisis on way to being

solved Capital gains still at 15%


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


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: 2008: $100.9B 2013: $82.5B

Aggressive model: 2008: $96.8B 2013: $60.2B

GDP model using +2.5% GDP

real growth rate 2008: $103.1B 2012: $96.2B

WTT ERC forecasts 2008: $97.0 2013: $78.0B


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PrintOnlineTotal

Newspaper Industry Woes Not Being Cured by Online RevenuesInflation-adjusted ad dollars, annualized as 4-quarter moving totals

based on data from Newspaper Association of America, www.naa.org and the Bureau of Labor Statistics© 2008, WhatTheyThink Economics & Research Center

Online ad revenuesnow 7.6% of total,

$3.3 B, growing <6%


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


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


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


“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.itexaminer.com/google-phone-arrives-on-tuesday.aspx

http://www.openhandsetalliance.com/


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

http://www.sci-tech-today.com/news/New-Versions-of-Amazon-Kindle-Due/story.xhtml?story_id=12100ESF56WP

http://news.cnet.com/8301-17938_105-10035276-1.html


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


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!

http://www.americanbusinessmedia.com/Forms.asp?MODE=NEW&Forms_FormTypeID=-107

http://www.vss.com/news/index.asp?d_News_ID=177

http://gdusa.com/issue_2008/06_jun/feature/index.php

http://digitaldaily.allthingsd.com/20080919/hi-im-a-pc-and-i-was-made-on-a-mac/


Dr. Joe’s Fall Reading List 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

http://www.ft.com/cms/s/0/32b85c72-859b-11dd-a1ac-0000779fd18c.html?nclick_check=1

http://www.buzzmachine.com/2008/09/17/zell-is-not-your-problem-you-are/

http://www.adweek.com/aw/content_display/special-reports/other-reports/e3i382d62ad1770e9ed08b537b94a343337?pn=5

http://nymag.com/news/media/50279/

http://www.btobonline.com/apps/pbcs.dll/article?AID=/20080811/FREE/426882613/1151/ISSUENEWS

http://www.pewinternet.org/report_display.asp?r=263


Dr. Joe’s Fall Reading List 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

http://www.pwc.com/extweb/industry.nsf/docid/8CF0A9E084894A5A85256CE8006E19ED

http://www.dofonline.co.uk/economy/the-state-of-publishing-and-digital-media295874.html

http://www.nytimes.com/2008/08/15/business/media/15adco.html?_r=1&oref=slogin

http://www.dmnews.com/E-mail-gaining-utility-among-marketers/article/113586

http://today.sportingnews.com/sportingnewstoday/20080924/?sub_id=BWENV1BBEzD0Y


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.

…"They" 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.

http://www.adweek.com/aw/content_display/community/columns/other-columns/e3icaabfeb875c91a9eded38a30d7566be6


Dr. Joe’s Fall Reading List

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

http://www.nber.org/cycles/jan08bcdc_memo.html

http://www.bls.gov/cpi/cpiqa.htm

http://developer.worldbank.org/sources

http://members.whattheythink.com/allsearch/articleerc.cfm?id=36004


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.

http://members.whattheythink.com/erc/sightings.cfm

http://www.mindfireincmarketing.lwcdirect.com/wtt_2008/





Thank You to MindFireInc!

QUESTIONS?Mark Your Calendars:

Next Economic Outlook Webinaris December 10, 2008


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“Road Warrior” Comments and

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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

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