by Steven Hansen
In past posts I have stated that the pundits expectations of a devastating trade war was overblown. For October, there were a record number of loaded sea container imports that passed through the Ports of Los Angeles and Long Beach.
The graph below shows the significant growth of import containers in October.
Even export sea container growth improved - and the three month rolling averages for both imports and exports grew.
Note that the year-over-year growth of both imports and exports are significantly higher than GDP.
Acceleration Month-over-Month
Change from One Year Ago
Year to Date vs. Previous Year
Acceleration 3 Month Rolling Average
3 Month Rolling Average vs. Average One Year Ago
Imports
+15.6 %
+17.7 %
+4.5 %
-+6.1%
+5.3 %
Exports
+2.6 %
+8.9 %
+4.5 %
+2.2 %
+5.8 %
This data set is based on the Ports of LA and Long Beach which account for much (approximately 40%) of the container movement into and out of the United States - and these two ports report their data significantly earlier than other USA ports. Most of the manufactured goods move between countries in sea containers (except larger rolling items such as automobiles). This pulse point is an early indicator of the health of the economy.
There is no analytical basis to claim that the "Trade War" is not impacting trade - but it is very difficult to see any affects of the "Trade War".
Economic Releases This Past Week
The following table summarizes the more significant economic releases this past week. For more detailed analysis - please visit our landing page which provides links to our complete analyses.
Other Economic Release Summary For This Week
The CPI year-over-year inflation advanced 0.2 to 2.5%. Inside the data, core inflation (less food and energy) year-over-year growth slowed 0.1 to 2.1%. The big contributor to inflation in October was energy.
October Retail Sales
Insignificant
The headlines showed an unexpected jump month-over-month. Let us say the reason for the month-over-month jump was the significant downward revision of the previous month's data. Still, Retail Sales YoY growth is much better than GDP's YoY growth showing the economy is currently being driven by retail sales.
October Import and Export Prices
Slight
Year-over-year import prices and export prices grew more than expected. Import prices are up 3.5 % year-over-year and export prices up 3.1 % year-over-year..
September Business Inventories and Sales
None
Inventories remain elevated this month. Our primary monitoring tool - the 3 month rolling averages for sales - declined but remains in expansion. Overall business sales have been improving since the low point in 2015 - and the trend over the last 6 months shows improvement in the rate of growth.
October Industrial Production
Slight
The Federal Reserve said industrial production improved. Our analysis shows the rolling averages declined. Whatever is going on, the manufacturing portion of industrial production is only growing at 2.7 % YoY - lower than GDP growth.
Surveys
Mixed
The NFIB Small Business Optimism showed continued near record level optimism. The report's authors point to Trump era policies as the reason. Also released this week was the Philly Fed, New York Fed, and Kansas City Fed's manufacturing surveys. The New York Fed's survey marginally improved, the Philly Fed's survey significantly declined, while the Kansas City Fed's survey improved with key categories mixed.
Weekly Rail Counts
Signs economy is slowing
The rolling averages and the year-over-year growth continues to slow. There is a correlation between rail growth and economic growth - and rail is saying the economy will slow.
In summary, there was little this week to indicate any real change in economic growth. The economically negative news seems to balance the positive developments.
Our Economic Forecast for November:
The Econintersect Economic Index for November 2018 continues to show the improvement cycle continues and remains well into territory associated with normal expansions. With the stock market correction, it is natural to assume that the economy is degrading. And there are several pundits throwing around forecasts of a recession. But our Econintersect Economic Index (EEI) moderately improved and still remains well into territory associated with normal expansions.
Our last forecast showed a significant decline in our economic index. This month there was a slight bounce. Still we are seeing mixed trend lines - which usually happens when there is an overall reversal in trends. Our major worry is the rapid deceleration of growth in rail transport data - a usual flag for a slowing economy.
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