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PIA comments on Federal Reserve policy



Published December 20, 2013
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The Center for Print Economics and Market Research of Printing Industries of America has released a statement regarding the December 18 announcement of the Federal Reserve on monetary policy:

On Wednesday, December 18, the Federal Reserve released the following statement: “Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable.”

Based on these improved fundamentals, the Committee believes it is time to begin tapering purchases of mortgage backed securities and Treasury securities. Going forward they will purchase $35 billion of mortgage backed securities each month instead of $40 billion and $40 billion of Treasury securities instead of $45 billion.

The market’s initial reaction to the news was extremely positive with the DOW increasing 292.71 or 1.84% on December 18. This is a positive signal to businesses that the Federal Reserve is becoming more confident that the economic situation in the United States is becoming more stable. We have not changed our forecast for economic growth (2.3% in 2014) or changes in Printing Industry Shipments (no growth in 2014), but this makes us more inclined to believe that there is an increased likelihood that economic growth may exceed 2.3% in 2014 and print shipments could increase by a slight margin, less than 1%.

Printing Industries of America’s economic outlook for 2014 and 2015 is for relatively tepid growth. Our view is that the negatives will slightly outweigh the positives over the next two years, resulting in around 2.3 percent growth in 2014 and 2.5 percent growth in 2015. This economic scenario leads to a forecast of fairly stable total printing shipments of $161 billion in 2014 and $159.9 billion in 2015.

The Center for Print Economics and Market Research is the premier source of accurate, up-to-date economic and market research information and forecasts on the North American printing industry, including equipment and consumable suppliers. The Center also provides independent assessments of the health and direction of the overall economy.


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