Current economic outlook is better than a double-dip

Retail sales and business inventories hit levels in August that topped expectations. There are two ways to look at this, I suppose: one being economic expectations these days are relatively low, and the other being that it is—and will remain—a long, slow crawl back to a sustained economic recovery.

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Retail sales and business inventories hit levels in August that topped expectations. There are two ways to look at this, I suppose: one being economic expectations these days are relatively low, and the other being that it is—and will remain—a long, slow crawl back to a sustained economic recovery.

It is clear that the sense of optimism from the first half of 2010 has abated to a large degree. That is to be expected, considering that much of that was fueled by an inventory ramp-up, which has since cooled down. This has been reflected in stabilized freight transportation volumes.

Even though there is some type of stabilization at hand, there is also good news out there, too, if you look close enough.

Take retail sales as an example. It was only up 0.4 percent and 0.5 percent in August, according to the Department of Commerce and the National Retail Federation, respectively, but Commerce said it was the largest gain in retail sales in five months. When a few basis points can drive the biggest five-month gain, it is not hard to deduce that there is a long way to go. But we need to take we can get, right?

Inventory sales, according to Commerce data, are also up. Commerce said that In July, business sales increased 0.7 percent, the largest gain since March, to $1.09 trillion in July after declining 0.5 percent in June. Commerce said the inventory-to-sales ratio, which measures how long it would take to clear shelves at the current sales pace, was unchanged at 1.26 months’ worth, according to an AP report.

This is good news for carriers in that it means there is freight needing to be moved…maybe not at the clip they would desire, but it beats having parked assets gathering dust at a service center.

Another good sign is a report from the Port of Long Beach which came out today, saying that imports were up 24.5 percent to 311,240 TEU in August—its highest level since November 2007 (look for a story on http://www.logisticsmgmt.com later today on West Coast port data for August). This type of demand for imports is having a significant impact of domestic intermodal traffic in the U.S., which has been a shining star in freight transportation for more than a while now.

While things are clearly still challenging on myriad levels, the sky is not dark (all the time) like it was a year ago either. With unemployment still high, stimulus funds running out, and political bipartisanship to help augment things clearly a wishful theory at best, there is a long ways to get to where we need to be. But, hey, at least it is better than a double-dip, right?


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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From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
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