Concerns over global and domestic economic outlooks appear to be growing

The shift in economic themes, while jarring, to a degree, has been underway for a little while, going back to late 2018.

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The theme regarding the economy a year ago at this time may very well have been “Happy days are hear again, given solid GDP growth, buoyed by high levels of consumer confidence, manufacturing output, and strong import volumes, among other factors."

But move ahead to the present, and the theme could be something along the lines of “Where have all the good times gone?” The shift in economic themes, while jarring, to a degree, has been underway for a little while, going back to late 2018.

Reasons for this vary, but a few key ones focus on trade tension between the United States and China, tariffs, declining demand levels, and let’s not forget the current, as well as potential impact of the seemingly interminable United States Federal Government shutdown, which is now in its fifth week.

And the drivers that were pacing the economy just a year ago at this time, specifically consumer confidence and retail sales, which serve as key indicators of demand for freight transportation and logistics services provider, are now being impacted by myriad factors, including the federal government shutdown and an uneven stock market performance, of late, which has the potential to serve as a drag on economic production.

A report in The Washington Post did an apt job of comparing the “then and now” as it relates to the ongoing shift in economic conditions occurring, in a story about global leaders meeting this week in Davos, Switzerland for the World Economic Forum: “In contrast to a year ago — when President Trump and other world leaders talked about global prosperity — this year attendees expressed worry that the United States was undermining its own economy, and the rest of the world’s, via a trade war and the longest partial government shutdown in U.S. history.”

That does not instill a lot of confidence in the current economic outlook, it seems, right?

What’s more, the Washington Post report quoted Christine Lagarde, managing director of the International Monetary Fund (IMF), saying the following:

“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.”

Again, that is not very encouraging. The report also observed that the IMF now expects 3.5% global growth in 2019 and 3.6%in 2020, which is down from previous estimates made last fall of 3.7% for both 2019 and 2020.

In a recent interview with LM, Chris Rogers, research director for global trade intelligence firm Panjiva, said that the that collective state of the global economy, at the moment, comes with a fair amount of concerns

And regarding the 2019 outlook, Rogers explained that the beginning of the year “faces strong forces in both the negative and positive directions,” as, on the negative side, industrial inventories are likely replete following the strong end to imports of 2018, coupled with tariff implementation delay in early December, maybe having led to a scaling back in shipments. On the positive side, it said that even with tariff uncertainty until March and in tandem with the timing of the Lunar New Year, industrial and consumer sentiment are still relatively solid despite recent declines.

“It really is difficult to say what may happen in the first quarter, as it is may be somewhat volatile, but it seems, in the second quarter, once we get past these U.S.-China negotiations, could see things slow down more,” said Rogers.

While it is far too early to say that the economy is in an actual free fall (it is not), there are many concerns out there that have the potential to “go south” in relatively short order. Global supply chains are well versed in their collective abilities to scale up or down, depending on economic shifts. Let’s hope things in 2019 get back to where they were in 2018 sooner than later.

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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