A little bit of everything in the economic headlines

When it comes to the economy, both positive and negative developments remain front and center.

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It is hard not to notice some of the positive headlines in the newspapers this week.

Take a look around you will see the same. There is the news the unemployment in February dropped down to a four-year low, with the United States economy adding 236,000 jobs, compared to the 165,000 that economists expected, according to a New York Times report.

And the Wall Street Journal reported that China’s exports were strong in February, which likely bodes well for increased signs of consumer demand although we will have a better idea of that when we see import number for February from West Coast ports next week.

There are also continued ongoing signs of encouragement stemming from improvements in housing starts and automobile sales, plus manufacturing growth appears to have stabilized, too, in recent months.

So things are going great and we are finally turning the corner, right?

Um, not so fast, you see, due to sequester-related matters, of course. As per the usual, politics continue to get in the way of economic growth like we have seen in the past. This is not a partisan point; it is just reality.

This point is spelled out pretty clearly by Nigel Gault, Chief U.S. Economist at IHS Global Insight, in a research note. The headline in Gault’s note pretty much says it all: Private sector is gathering momentum, but the sequester will slow growth temporarily.

“The private-sector news on the economy continues to be good, and we would be upgrading our forecast of 2013 growth slightly were it not for the federal spending sequester that began on March 1,” wrote Gault. “The sequester will not derail the recovery, but it does slow it down. We now assume that the sequester remains in place through June (previously we had assumed that it ended early in the second quarter).”

Gault’s analysis helps to quell the speculation and in a sense fears about the possible impact the sequester could have had on the economy and subsequently supply chain and logistics operations to a degree, too.

But it is obvious we are far from out of the woods at the same time. Gault observed that March 27, the date when the continuing resolution that funds the government expires, is one to circle on your calendar.

The reason for that he said is that both Democrats and Republicans do not want to force a government shutdown but at the same time the continuing resolution will be what puts an end to the sequester either.

“If the sequester is to end at all, it will require some evidence of public discomfort from its effects to turn up the heat in Washington and produce a compromise,” wrote Gault.

I guess in some respect that points to the fact that perhaps Congress really does have our best interests at heart (grin).

In any event, there are things happening on the economic front, both good and bad, that we need to keep an eye on. As we approach the end of the first quarter, we should start to see some seasonal inventory and related volume builds heading leading into the second half of the year, but then again maybe we won’t, too. We all know that Peak Season has not appeared in a true sense in quite some time but that has not hindered some signs of optimism either.

Assessing the economy is tricky for all of us. At this point, we need to remain focus and play the hand we are dealt until the cards start coming our way.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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