Signs of a Slowdown
By the time the economic numbers come out, and then later when they're (inevitably) adjusted downwards, the signs have already been apparent, if anyone cared to look.
Everyone, I guess, has his own favorite early metric. We've all got a personal leading indicator: the number of people at the movies on a weekday; how crowded the Best Buy is on a Saturday afternoon; gas prices; that sort of thing.
My indicator is container shipping activity -- how many ships are being chartered suggests a lot about the coming economic news. From Bloomberg:
Plunging rates for chartering container vessels that carry sneakers, furniture and flat-screen TVs may signal a U.S. consumer slowdown and losses for shipping lines in what is traditionally their busiest time of the year.
Fees for hiring vessels have fallen 9.3 percent since the end of April, according to the Howe Robinson Container Index, which tracks charter rates for a range of vessels. Last year, the index surged 56 percent in the period, as lines added ships on demand from U.S. and European retailers restocking for the back-to-school and holiday shopping periods.
“The troubling part is that charter rates are falling in the peak season,” said Johnson Leung, head of regional transport at Jefferies Group Inc. in Hong Kong. “Sentiment among consumers and retailers isn’t very strong.”
Of course, I'm a container ship weirdo. I find them fascinating. I have "container shipping" as one of my "sparks" on Google+. So that's my indicator, and it's not pointing in a good direction. Anyone have an indicator that's pointing to good news?
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Re: Signs of a Slowdown
Bad news on the Youth Football front. Everyone's numbers are down. Discretionary spending.
May '10
Re: Signs of a Slowdown
Rob, that's a really important leading indicator. And no, I don't have anything pointing to good news.
Rates, as you use, are a good measure. The amount of shipping moored at anchor around Singapore is another one. We had a similar one for the North Sea oil business - when all the floating drilling rigs were moored in Nigg Bay north of Inverness, things were grim.
May '10
Re: Signs of a Slowdown
When I did my training for the investment business in 1981, I had a fellow trainee that was telling me that the economy was poised for recovery because he had a friend who had a business that was a perfect indicator. Those wooden platens that you use piling goods on top of for forklifts were made by his buddy's company. When their orders shot up in late 1981, he knew the economy was going to start to recover in the second half of 1982.
I should give him a call, but I think I already know what he will say.
Jun '10
Re: Signs of a Slowdown
Another measure:
At Amazon, only 3 copies left (in stock) of "Roadkill Cooking for Campers"
Apr '11
Re: Signs of a Slowdown
In my work I speak to lots of folks in the chemical industry. Most interesting to me are the precursor chemicals used in the intial stages of many types of manufacturing. Increases and decreases in the volume of these chemicals is not typically seen in the economy for 12 months because of the time lapse between shipment of the chemicals and final production/packaging/delivery of the manufactured goods. All the people I talk to are slow right now, so look for your container numbers to be even worse this time next year and in early fall '12.
Apr '11
Re: Signs of a Slowdown
Gold $1,782 +
Dec '10
Re: Signs of a Slowdown
Any truth to the rumor that California ports are having trouble finding storage space for all their empty containers?
An obvious bad sign -- the demand for gold. Not just because it suggests a distrust of the currency, but even more because the velocity of money must slow to a disastrously painful crawl when all that capital is tied up in economically non-productive commodities, rather than enterprises with a future.
My new tag line: God help us.
Jun '11
Re: Signs of a Slowdown
1. You have a ton of cash on corporate balance sheets. Eventually bullish.
2. You have a ton of "cash" on bank balance sheets in the form of bank reserves. Banks right now are holding 20x the amount of reserves they need. They are doing this because in the fall of 2008, the Fed decided to pay them interest on their reserves. Once that money does get pushed out into the system, it will translate into a spike in commercial lending levels. Eventually bullish.
3. You have a rapidly evolving political climate where tax and spend political hacks are being forced to back off. This theme unfolds over a longer period but still.....eventually bullish.
4. Short term, trading indicates another shoe about to drop. It's going to get scarier before it gets better. The recent S&P rally off what looked to be a fairly climactic sell off left the financials out of it. And while oil and gold are like.....really important, we need the financials to sustain any meaningful stock market rally and also any prolonged economic recovery.
Edited on August 16, 2011 at 8:10pmRe: Signs of a Slowdown
I can think of one indicator suggesting that there is hope: Obama's approval rating is below 40%.
Jul '10
Re: Signs of a Slowdown
My first tell that the economy is irretrievably broken is when fuel prices are dropped from the Consumer Price Index. Oops. My second tell is when food prices are dropped from the Consumer Price Index. Oops. My third tell is when the opposition media is slandering the economic performance of Texas. Oops. My fourth tell is when bumbling Barry has to spend taxpayer dollars to campaign. Oops.
When your neighbor loses his job, it's a recession. When you lose your job, it's a depression. When bumbling Barry loses his job, it's a recovery!
May '10
Re: Signs of a Slowdown
Google, shutting down Google Labs? On the other hand, Google just purchased Motorola's mobile communications division, so maybe Google is a mixed bag.
The big name technology companies are a conundrum to me anyhow, as they often simultaneously display business sensibility and socio-political naivete.
Apr '11
Re: Signs of a Slowdown
Prices on generic pharmaceuticals are up due to industry collusion to limit the number of manufacturers of any one drug thus choking off supply.
Jun '11
Re: Signs of a Slowdown
There are a few relatively positive indicators. Among them: 1) US industrial production in July rose to levels not seen since August 2008. 2)Vehicles in operation worldwide hit an all-time high this summer at 1.015 Billion 3) Back in the US combined household debt, mortgage plus consumer debt, is steadily going down while the personal savings rate has gone up to 5.4% That savings number is back to 1990's levels but still much lower than the 80's. It appears that, while the folks in DC are making a hash of their budgets, out in the nation people are cleaning up their personal balance sheets.
I too follow shipping using the Baltic Exchange Dry Index. That index shows what you're posting about, Rob. Certainly part of the problem is the disruption in Japanese trade due to natural disaster. Still, it looks troubling.
Aug '10
Re: Signs of a Slowdown
I heard last year there was a move to put one quarter of the world's containers into storage and try and tighten up the supply a bit.
Then maybe all those orders for televisions, tennis shoes, computers, and toys are just being filled by the factories here in the United......wait... that's probably not the case. Sorry I forgot we don't manufacture much anymore over here. Well we do have one burgeoning sector.
Feb '11
Re: Signs of a Slowdown
Productivity (Output per hour, nonfarm business, quarterly data, percent change from previous quarter at annual rate, seasonally adjusted) for first two quarters of 2011 was negative [-0.6 and -0.3], more negative news. (Link here)
According to Federal Reserve, total consumer credit increased at an annual rate of 4.25% while GDP growth is only 1.3%, indicating that consumer debt as percentage of GDP at least temporarily is headed up. (Link here)
Savings rate has been between 4.7 and 5.4% in 2011. (Link here) It is also down from 2010 rates.
It's true that American corporations earned healthy profits in 2010, but almost half (46.3%) of those profits were from outside the US. (Link here) This will likely affect where those corporate profits are invested and that will have future effects on US economy. In second quarter of 2011, however, corporate profits had much smaller increase. (Link here)
Not a good picture. Consumer confidence isn't down for nothing.
Aug '10
Re: Signs of a Slowdown
As a fellow box ship wierdo, I concur. The Hanjin Boston is working four cranes out side my window right now so, there is that.
Jun '10
Re: Signs of a Slowdown
As my pile of job applications pile up in the rejection pile and surpass the height of the lamp, I start to wonder.
Oct '10
Re: Signs of a Slowdown
UPS shipping volume is a great consumer indicator.
Oct '10
Re: Signs of a Slowdown
Is Ricochet slow today?
Edited on August 17, 2011 at 4:40amOct '10
Re: Signs of a Slowdown
Too much coffee.
Edited on August 17, 2011 at 4:41am