Looking for a light at the end of the economic tunnel?
Economist Bill Ralph said Thursday there are signs that confidence is growing among consumers and that he’s projecting containerized trade to grow 5 to 7 percent on the transpacific this year.
Ralph, president of the transportation and logistics consultant R.K. Johns & Associates, delivered the morning keynote Thursday in Norfolk, Va. at the Virginia Maritime Association’s International Trade Symposium, co-sponsored by American Shipper
Ralph was optimistic because of signs that the housing market – which he said is directly attributable to about 25 percent of U.S. containerized trade – appears close to bottom. He pointed to a rise in the number of housing transactions involving people who don’t intend to live in those homes (i.e. speculators).
But Ralph cautioned that waiting for housing prices to recover is not a solution to U.S. economic woes.
“Housing prices went down 34 percent in the crisis,” Ralph said. “We’re not going to be able to wait for housing prices to go back up for consumer confidence to return.”
Instead Ralph pointed to the strength of foreign markets, and said he believes U.S. export growth can reach double digits in 2012.
“There are economies around the world with room to grow, an appetite for goods, and very little inflation,” he said.
Meanwhile, employment figures in the United States are promising, but can be misleading. The country needs 100,000 new jobs per month to keep pace with population growth. And Ralph noted that the new jobs being added are not the type of jobs required to increase consumer spending – most are service jobs that pay below-average wage levels.
“You have to look under the covers at employment numbers,” he said. “Income growth is 3 to 4 percent, but you need 5 to 6 percent to sustain economic growth.”
The good news, in terms of looking for signs of economic expansion, is that workforce productivity has pretty much reached its peak, Ralph said.
“That’s good news,” he said. “That means if industry wants to expand, it needs to hire more people.”
Yet the threat of rising oil prices always looms, but Ralph pointed out that the actual cost impact of fuel is less significant than its perceived impact.
“It’s the impact on confidence,” he said.
Finally, Ralph also downplayed China’s forecast import growth rate of 7 percent as conservative.
“The idea that China will grow 7.5 percent is clearly an understatement,” he said. “We haven’t seen that growth in China since the mid-1990s.” - Eric Johnson