As noted by multiple sources, including the National Retail Federation (NRF), Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU), the nation's West Coast ports have bounced back quite well after the extended labor dispute that brought export and import activity to a virtual standstill, due largely to containers clogging up entryways. Now that things have cleared, a good portion of what's flowing through these outposts are outbound, but it's what's coming in that's really producing "waves," so to speak.
The import storm has been especially apparent in California and Washington, specifically the ports of Los Angeles, Long Beach and Oakland in the Golden State and Tacoma and Seattle in its neighbor to the north. Fully loaded containers into the L.A. port rose 69 percent in March when contrasted with the previous month, according to Bloomberg. And in Long Beach, imports rose 55 percent compared to February, the largest growth rate measured in 20 years.
Meanwhile, in Washington over the same period, the combined volume of imported containers reached levels not seen in seven years.
Exports were far less, Bloomberg noted, with outbound container shipments increasing 10 percent and 15 percent, respectively, in L.A. and Long Beach.
Neil Dutta, head of U.S. economics at Renaissance Macro Research in New York, pointed out that it's important to look at both exports and imports in order to effectively gauge what's accounting for port activity at any given time, as it's rarely an even split.
"The improvement in containers handled, a proxy for trade activity, was largely the result of more inbound containers," said Dutta, according to the news agency. "Outbound containers bounced, but remain weak, a sign that the strong dollar and weak global economy have taken a toll on U.S. export activity."
Slower exports may negatively affect GDP
Dutta indicated that trade influences the nation's gross domestic product (GDP), one of the main indicators that grades the health of the economy. It's possible that the relative slowdown of exports in comparison to imports may cause U.S. GDP to slide in the first quarter, perhaps by 1 percent. The U.S. Department of Commerce will release GDP figures for January through March on April 29.
Economists are encouraged that GDP made some headway in the first quarter, modest though it may be. In a survey of financial market experts, economists predicted an expansion of 1.4 percent on an annualized basis, according to Bloomberg.
Consumer comfort levels recede
Consumer buying accounts for roughly two-thirds of the U.S. economy, so domestic demand will also factor into the expansion or contraction of GDP. For the second week in a row, consumer confidence retreated during the seven-day period ending April 19 on Bloomberg's Consumer Comfort Index, falling to 45.4 from 46.6. That's the lowest point in five weeks. Sentiment was especially modest among workers making $50,000 a year or less.
Gary Langer, president and CEO of Langer Research Associations LLC, said that those who make upwards of six figures, meanwhile, had a much more sanguine take on financial wellness.
"Heightened economic disparity may be related to countervailing trends," Langer told Bloomberg. He added that the most likely cause of low-wage workers' dispirits is stagnant salaries. This in and of itself influences sentiment.
Dutta told Bloomberg that one of the ways in which to get GDP and sentiment back on track is by prioritizing consumers spending.
"I think focusing on domestic demand is more useful," said Dutta. "Trade and inventories are the two most volatile components in the GDP accounts."