The good, the bad and the ugly

I know that I have previously complained about the travails of being an economist these days. Trying to forecast anything has become a challenge as the normal economic indicators have taken a back seat to tweets.

Take cargo demand flows, for example. We used to rely on output, production and inventory data for the short-to-medium term projections. Today, we first check the headlines to see what President Trump has tweeted regarding tariffs, Iranians and interest rates just to name a few topics.

What should have been a good year for trade has been negated by these tweets so that stock markets crash. inventories are built-up in expectations of tariffs and stock market volatility is really ugly.

Economic data is sending us conflicting messages, suggesting a strong U.S. economy with poor indicators from the manufacturing sector supported by negative trends inn China where production slowed to a 17-year low.

Factory output is at the lowest level since 2002. Remember that the Great Recession was in 2008-09. A weak Chinese economy signals that the rest of the world that buys its exports is not altogether healthy.

It is clear that strategic policy positions are currently being driven by the use of trade as a tool of warfare in the economic forum.

This creates uncertainty for industry and for investment. Huge amounts of money is being spent on “The Wall” which would be better applied to improving the decaying infrastructure.

It is also evident that ports cannot escape the repercussions of weakening trade. As carriers remain in an uncertain financial environment, they will increasingly pressure ports and terminals to provide further discounts on their charges, thereby increasing financial pressures on a once highly profitable sector of the maritime industry.

The industry does not help itself by developing increasing port capacity, particularly in Asia and South America. There is too much state backing (read China) and cheap money out of Asia to fund the growth of new terminals.

What is also worrying is that the bulls and the bears are running wild on the global stock markets trying to predict an impending recession. This creates further uncertainty as money flows into cash rather than into investment support for industry.