The 2020 Economy: Slowing, but No Recession

Several economic indicators suggest that the US economy will slow in 2020 but that a recession is unlikely. That was the message delivered to attendees during a December 17 Mailers Hub webinar presented by Andrew Paparozzi, Chief Economist for the Specialty Graphic Imaging Association.

(Miss the webinar? Subscribers can view the recording here, in the Mailers Hub Archives.)

Looking at the signs

In his presentation, Paparozzi noted that the nation’s economy has already slowed; the US gross domestic product grew at a rate of 2.9% in 2018, but the expected rate in 2019 is 2.3%, and 2020 GDP is forecast to be only 1.8%. Though there will still be growth in 2020, the decreased rate still represents a significant “loss” – the economy growing by 2% reduces GDP by approximately $210 billion from what it would have been had growth continued at 3.0%.

Two reasons for the slowing economy, he suggested, were “economic brinksmanship,” i.e., ongoing trade disputes between the US and China, Canada, and the European Union, and the shortage of qualified labor in several industries. The resulting uncertainty discourages capital investment, Paparozzi added, as businesses defer major spending until greater clarity is possible.

Another source of uncertainty is the 2020 elections; who will be in the White House, and which party will dominate Congress, will be a major influence on a wide variety of issues impacting trade and economic policy – and, in turn, businesses willingness to make the major investments that can result in economic growth.

Recession unlikely

A recession is not looming, however. Despite the aforementioned drugs on the economy, continued growth in wages and, in turn, consumer spending, have partially offset the weakness in capital spending and corporate profits.

The US economy, Paparozzi stated, is “flexible” and “adaptable,” allowing it to “adjust to anything” as the economic environment changes. Recessions, he noted, arise from circumstances outside the economy's natural forces, such as excesses, policy errors, and “exogenous shocks.” The real estate and dot-com bubbles that preceded the 2008-2009 and 2011 recessions, respectively, represent excesses; overly-tight monetary policy, poorly designed tax increases, and regulatory changes are among the policy errors; and the OPEC oil embargo of the 1970s represents an “exogenous shock.” Such contributors to a recession are not present heading into 2020.


Of concern nonetheless, and the possible source of a future recession, is excessive public and private debt.

For example, the total debt of US nonfinancial corporations grew 68.3%, from $3.8 trillion in Q1 of 2011 to $6.4 trillion in Q1 of 2019. This has been driven in part by a decade of suppressed interest rates that have encouraged borrowing, but those rates eventually will rise, as will the cost of servicing the debt that’s been incurred. In turn, this will divert corporate income away from investment and hiring.

Meanwhile, the debt of the US government is over $22 trillion, and the portion of that amount held by “the public” (including foreign governments) has grown by 121.3% over the past decade. The annual interest paid on that debt is over $370 billion, more than the US government spends on defense, and diverts money that could otherwise go toward more worthwhile purposes.

Printing and mailing

Paparozzi looked more closely at disciplines related to the commercial mailing industry in an article appearing in the December 17 online issue of Printing Impressions (excerpted here with permission).

In his article, Paparozzi wrote that the companies who thrive in 2020 “will not be a particular size or offer a particular mix of technologies, products, and services” but rather “will be skilled in disciplines such as opportunity evaluation, execution, and human resources, creating growth and shepherding that growth from the top line to the bottom line.”

Meanwhile, SGIA’s research group found growth in several markets.

Majorities report growth in several categories that likely will translate into volume distributed through commercial mailing activity, including targeted direct mail (+54.8%), transactional messages, financial documents, and catalogs.

Making money

Paparozzi stated that about twenty obstacles to building margins were reported by respondents to SGIA’s survey, including “extreme shortages of skilled production personnel, rising wages, the rising cost of health care benefits, the rising cost of essential supplies and materials, workflow inefficiencies, and the inability to capture a bigger share of the client’s wallet despite adding products, services, and capabilities.”

In turn, he added, the consensus among respondents was that “sustained profitability isn’t about finding the next big thing. Rather, it’s about cultivating skills in mission-critical disciplines.” Those disciplines include:

Human Resources. Competitive compensation packages, but also investing in training, mentorship programs, career development, employee engagement programs, and employee recognition programs.
Efficiency. “Working smarter,” minimizing steps and touches company-wide, eliminating what no longer adds value, lean manufacturing, continuous improvement, etc.
Execution. Not just effective planning, but making plans hap-pen. No “set and forget.”
Evaluating Options. Deciding what is and isn’t an opportunity given a company’s resources, capabilities, and circumstances. Not following the crowd into the next hot thing, no matter how much buzz it is creating.
Customer. Hearing the voice of the customer – creating deeper knowledge of what customers really value and never assuming we already know – and acting on what we hear. Eliminating habitually unprofitable clients to focus on recruiting, retaining, and developing profitable ones.
Capital Investment. Certainly to increase speed, productivity and automation, and to open new markets, but also to capture more timely, accurate data on what’s happening internally so we can build on strengths and immediately address weaknesses. It can be used to capture the “wow power” of new printing and finishing technologies, and of advanced personalization.
Culture. Creating a culture of innovation that encourages employees to find more efficient ways to work and to create more value for clients.
Sales. Selling value rather than commodities, consultative sales rather than transactional sales, and selling to marketing executives, creative directors, and others who set media strategies, rather than print buyers and purchasing agents
Marketing. Including social media marketing, to show clients and prospects who we are, what we stand for, how we contribute to the community, and how we can help them prosper.

Printed messages

SGIA’s survey also asked if clients and prospects “are coming back to print.” More than 56% said “somewhat,” 33.6% said “no” and only 10.3% said “yes.” The explanation was that print is increasingly perceived as ineffective, especially by younger clients and prospects. Such perceptions clearly need to be reversed by greater industry efforts and by demonstrating that printed messages remain effective.

Articles in various publications have explained that such e-commerce icons as Amazon, Wayfair, eBay, and Greats have embraced print that is personalized, integrated with electronic media, and interactive/mobile.

For example, Amazon’s catalogs, highly personalized by drawing on its vast database of client purchase history and preferences, do not include prices. Instead, readers scan images of interest and are taken to the relevant pages on Such an innovative practice shows that the company is not abandoning print but finding a new, compelling use for it.

Paparozzi suggests that “the gamut of opportunity is expanding … but the margin for error is shrinking.” This should propel every company to ask itself what it will do better in 2020; how it will cultivate the skills required to sustain profitable growth; how its clients’ communications needs are changing and how it will respond; and how it will create even greater value for customers while ensuring they recognize that value.

Andrew D. Paparozzi is Chief Economist at SGIA. He joined SGIA in July 2018. Previously, he worked 31 years at the National Association for Printing Leadership (NAPL), where he developed the Association’s State of the Industry Series, Capital Investment Report, and numerous other studies on the commercial printing industry’s performance and prospects.

Mr. Paparozzi is a Phi Beta Kappa, summa cum laude graduate of Boston College, holding a BA in economics. He also holds a Master’s degree in economics, with concentrations in econometrics and public finance, from Columbia University.


Share this post:

Comments on "The 2020 Economy: Slowing, but No Recession"

Comments 0-5 of 0

Please login to comment