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While December retail numbers are mixed, economic outlook remains cautious
Friday, 15 January 2010 00:00
Economic indicators point to a slow, cautious recovery.

WALTHAM, Mass.—Despite various anecdotal reports which suggested consumers were coming out of hiding and pumping more money into a largely stagnant economy, recently released retail sales numbers tell a somewhat different story.

Earlier this week the United States Department of Commerce reported that December 2009 retail sales slipped 0.3 percent from November 2009 to $353.0 billion. But although there was a sequential decline, December 2009 retail sales were up 5.4 percent year-over-year, while total sales for all of 2009 were down 6.2 percent year-over-year. Removing automobile sales from the mix December was down 0.2 percent from November and up 5.2 percent year-over-year.

Meanwhile, the National Retail Federation reported that December retail sales-excluding automobiles, gas stations, and restaurants-were up 2.3 percent unadjusted year-over-year and down 0.5 percent seasonally-adjusted from November. The NRF also said that preliminary 2009 retail sales, which are comprised of November and December data, were up 1.1 percent year-over-year to $446.8 billion, which tops its projected decline of 1.0 percent and $437.6 billion sales estimate.

"With an eye on managing inventory and maintaining lower price points, retailers did a tremendous job of planning for the holiday season," said NRF Chief Economist Rosalind Wells in a statement. "While the consumer appears to be spending again, double digit unemployment numbers will remain an impediment to maintaining this momentum."

Aside from the retail figures, other recent economic indicators continue to present a "mixed" economic outlook, including:

  • a 9.7 percent increase in the November 2009 U.S. trade deficit to $36.4 billion, with exports up 0.9 percent to $182.2 billion and imports up 2.6 percent to $174.6 billion, according to Department of Commerce data; and
  • rising oil prices, with the price per barrel hovering around the $80 mark, and gasoline prices rising in recent weeks.

On the more positive side is a report from the Federal Reserve's "Beige Book," which indicates the U.S. economy has improved modestly in recent weeks although economic activity remains at a low level. The Beige Book reported that freight shipping volumes were up slightly in three of the five districts reporting on transportation services-Atlanta, Cleveland, and Dallas. And it also noted that manufacturing was up overall.

In another encouraging sign, volumes at the Ports of Long Beach and Los Angeles were up in December, finishing off a year that was replete with declines on a strong note heading into 2010.

"In general, things are starting to appear more positive to a certain extent," said Eric Starks, president of FTR Associates. "We have been looking for stabilization in the economy and have seen things stabilize [in recent months] as the economy bottomed out."

While there are some positive things occurring, Starks said that freight volumes need to show consistent gains in the coming months as recent positive economic gains have not turned into a true rebound in freight demand.

Manufacturing shipments up: Recent data from Panjiva, an online search engine with detailed information on global suppliers and manufacturers, indicated that from November to December the number of global manufacturers shipping to the U.S. was up 3 percent, following a 1 percent decline from October to November. The 2009 increase topped 5 percent and 1 percent dips in 2009 and 2008, respectively. Panjiva added that the number of U.S.-based companies receiving waterborne shipments from global manufacturers was up 2 percent from November to December.

"I was pleasantly surprised by this increase," Green told LM. "Certainly you would expect after the holiday rush to see seasonal declines, so for there to be an uptick from November to December certainly suggests that businesses are more optimistic than I would have anticipated."

These signs, in turn, lead to a healthy level of optimism in the business world, with upward consumer spending being surprising, too, said Green. But he cautioned it is premature to say we are witnessing a sustained economic recovery, because in an absolute sense output is still well below prior to the 2009 recession, which has seen several ups and downs since global trade bottomed out in February 2009.

Logistics Management, 1/15/2010