Outlook 2005: from all indications, service providers remain conservatively confident as they enter a new year and hope to put a slow economy behind them.(Cover Story)

"Cautious optimism" is the phrase that has been popping up in articles and conversations when the topic turns to the possibilities for 2005. It's a phrase that neatly captures the mood of the business community as the new year begins. No one knew what to expect at the start of 2004, but toward the end of the year most people relaxed a bit. Even with a war going on, there have been no major terrorist incidents on U.S. soil and the presidential race has been decided.

In 2004 the economy grew modestly overall, not more than a few percentage points, but unemployment rates remained higher than most analysts expected. In the printing and publishing industries, consolidation continued. Some printers shut their doors while others found partnerships to help ease the financial burden. Everyone in the graphic arts, though, felt as though they got some kind of economic boost from major events such as the Olympics and the elections.

At the Print Outlook 2005 conference held in Virginia in early December, Dr. Ronnie Davis, chief economist for the trade organization PIA/GATF, reported that "U.S. print markets showed surprising strength over the first three-quarters of 2004. Indeed, sales growth was the strongest since the late 1990s." Davis's statistics indicate that while 28 percent of printers saw sales decrease, the majority (64 percent) saw sales increase several percentage points or more.

For 2005, industry observers and analysts agree that the prospects for the graphic arts industry are good, but not great. No boom, but no bust, either. Industry watcher Dr. Joe Webb sums up the 2005 prospects this way: "Commercial print volumes will stabilize, but still lag economic growth and inflation. The best sectors will be consumer magazines and direct mail. Real growth, adjusted for inflation, will only be about 1.25 percent for all of 2005 ... The steep decline of the industry is over for now."

It isn't just the pundits who are thinking 2005 will offer somewhat improved opportunities; most graphic arts professionals think business will be at acceptable levels or better. A year-end Outlook 2005 study released by Trend-Watch Graphic Arts reports the print community is "upbeat" about 2005. According to the study, 32 percent expect business in the next 12 months to be excellent, better than the previous 12 months, while 58 percent expect business to be OK or at least as good as 2004.

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