Volume at the Ports: Record Year at the Port of Los Angeles

It was a record year at the Port of Los Angeles:

Cargo volumes at the Port of Los Angeles reached 8,856,782 Twenty-Foot Equivalent Units in 2016, marking the busiest year ever for a Western Hemisphere Port. The previous record was set in 2006, when the Port of Los Angeles handled 8,469,853 TEUs.

Attributed to the success is cited as understanding:

…”the importance of innovating and collaborating to move our economy forward,” said Mayor Eric Garcetti. “We have seen incredible progress over the last two years, and it speaks to the hard work and partnership between the City, business leaders, and the workers who keep our port running smoothly every day.”

The Port finished the year strong, with December volumes of 796,536 TEUs, a 27 percent increase compared to the same period last year. It was the Port’s busiest December and fourth quarter in its 110-year history. Overall in 2016, cargo increased 8.5 percent compared to 2015.

The end of the calendar year 2016 showed the following shipment activity:

Port of Los Angeles Container Trade TEUs 2000-2016

To put this milestone into perspective, look at the same time span filtered to total containers only (this illustrates the long crawl forward since the mid-2000s): Total Containers POLA

The Port of Long Beach had a little different year, but still posted strong results in spite of challenges:

Slowed by industry headwinds and challenges that included a major customer declaring bankruptcy, the Port of Long Beach still moved almost 6.8 million containers in 2016, its fifth best year ever.

Overall cargo declined 5.8 percent in 2016 compared to 2015, as the Port was impacted by new ocean carrier alliances and the August bankruptcy of Hanjin Shipping, a South Korean company and former majority stakeholder at the 381-acre Pier T container terminal — Long Beach’s largest.

By year’s end, the Harbor Commission had approved an agreement for a subsidiary of Mediterranean Shipping Co., one of the world’s largest container ship operators, to take sole control of the long-term lease at Pier T.

…“Last year was turbulent, with numerous ocean carrier mergers and other changes,” said Harbor Commission President Lori Ann Guzmán. “Now we have one of the largest ocean carriers in the world as a major partner and we’re well positioned to rebound in 2017. While the industry strives for equilibrium, Long Beach will continue be a reliable port of entry and continue to provide the fastest, most efficient services for trade from the Far East.”

 

Plot 378

Again, the change in volume since the mid-2000s is even more felt when viewing total containers only:

Total Containers POLB

20th Anniversary of One of the Most Iconic Expressions in Finance: Irrational Exuberance

Irrational exuberance has been one of the most iconic and recognizable phrases in the financial markets for the last twenty years – to the day. I remember this like it was yesterday, being a recent graduate and shortly after, working in the capital market. This really was the advent of an era where there has been no looking back: a tenuous and ambivalent relationship with the Fed and every nuance uttered by the Chair. Here is the full quote in its context:

Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability. Indeed, the sharp stock market break of 1987 had few negative consequences for the economy. But we should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy. Thus, evaluating shifts in balance sheets generally, and in asset prices particularly, must be an integral part of the development of monetary policy.

Read the full speech from the minutes here.

Interestingly enough, here is some commentary in our present time declaring, “rationally exuberant,” (caveat emptor on long positions if you ask me):

Not everyone is convinced of this view to be sure:

In recent years the Fed has only doubled down on these policies by directly pursuing a “wealth effect.” Rather than give a boost to the broad economy, however, these central bankers have only accomplished an even greater and more pervasive financial asset perversion. Stocks, bonds and real estate have all become as overvalued as we have ever seen any one of them individually in this country. The end result of all of this money printing and interest rate manipulation is the worst economic expansion since the Great Depression and the greatest wealth inequality since that period, as well.

See the full post here.

Apps for Economics

I found this excellent site in the Journal of Economic Education as I was researching another topic. In that article, the following overview describes the useful content cataloged on the site:

As the digitization of teaching resources becomes increasingly available, instructors can adapt by making course pedagogy more mobile through incorporating “bring your own device” into the course design. The number of available apps can be overwhelming. We identify many of the best apps with user rankings on a 5-point qualitative scale from Awful (1) to Excellent (5).

Why should we use apps in economics? Strategic selection of an app engages students. This selection offers understanding throughout a range of cognitive domains while providing connections to learning styles that link to individual strengths. Apps provide a hands-on study of economics that can intrigue and satisfy. When students have fun engaging economic apps, their learning and retention increases. Our Web site arranges the apps into seven categories: Study Aids, Calculators, Data, Events, Feedback, Quizzes, and Simulations. Study Aids provide resources for better understanding principles of economics. Calculators identify spreadsheets as well as financial, mortgage, and currency calculators. Data apps profile domestic and international macroeconomic data sources. Events allow class members to keep abreast of current events. Feedback offers instructors a variety of mechanisms to gather classroom responses. Quizzes afford students tools for selftesting of economic concepts. Simulations generate a virtual world to put economics into practice. (Cochran, Velikova, Childs & Simmons, 2015).

 The site is authored by an excellent team of innovators, researchers and educators who have a “passion for technology.” This site is an excellent resource and I hope it continues to be updated.

 

Reference:

Cochran, H. H., Velikova, M. V., Childs, B. D., & Simmons, L. L. (2015). Apps for Economics. Journal Of Economic Education, 46(2), 231. doi:10.1080/00220485.2015.1006745

WSJ: Is Growth in the Gig Economy Stalling Out? – Flattening Growth Trend in Uber, Etsy and Airbnb

The Wall Street Journal asks, Is Growth in the Gig Economy Stalling Out? Flattening trends are seen using information from Morgan Chase & Co. related to earnings from “Uber, TaskRabbit, eBay, Airbnb and nearly 40 other sites considered part of the “gig economy.””

These new sites and platforms hold the potential to radically reshape the American workforce, leaving a growing number of employees severed from traditional payroll jobs. But just how much is that actually happening? Research has suggested that most of the rise in independent contracting has been happening outside of these high-profile online platforms. And now, the latest data from JPMorgan suggests growth in the number of active users of online platforms is slowing down.

cxunuuqwiamod3r

The report distinguishes between two types of platforms: those where users sell “capital,” whether it’s goods on eBay or Etsy or renting apartments, and those where users sell “labor,” such as Uber, Lyft, TaskRabbit and so on. They find that about 1% of adults are active on such platforms in any given month. That’s up, but only a little bit, from estimates made earlier this year. The period of explosive growth for this type of work may be over. (Only a trivial number of people use both types of platforms.)

This extraordinarily high turnover “implies that growth in online platform participation is highly dependent on attracting new participants or increasing the attachment of existing participants,” the report says. In other words, if companies in the gig economy want to keep growing, they need a strategy to stop people from quitting after a few months.

The post cites a remarkable number of adults who have participated in shared economy jobs but an extraordinarily high rate of churn from these jobs inside of a year. This actually resembles similar trends that occur during normal economic slowdowns where professionals or skilled labor temporarily take on unrelated, sometimes reasonable earning temporary work. But it appears there is a shift back to traditional jobs rather than a new trend that was going to change the world.

Motor Intelligence July Auto Sales

Results from Motor Intelligence returned the following for the nation’s top three automakers:

Autodata 2016 08 02

From the Wall Street Journal:

Sales for the top three auto makers selling in the U.S. slipped in July, reinforcing the view that the light-vehicle market has plateaued after six consecutive annual volume increases.

Declines at General Motors Co., Ford Motor and Toyota Motor Corp. overshadow increases by smaller players; including Nissan Motor Co. and Honda Motor Co. The sustained run of sales gains in the U.S. since the financial crisis has allowed most auto makers to limit reliance on discounts and keep inventories lean, padding profits generated by increased demand for trucks and sport-utility vehicles.

…The auto industry’s recovery has been a bright spot for the U.S. economy, with high factory utilization spurring new jobs, investment in American facilities and wage growth for Detroit’s auto workers. Car buyers spent $49 billion on light vehicles in July, according to TrueCar Inc., up 1% amid longer loan terms and a boom in subsidized auto leases—trends that keep monthly payments on par with a decade ago even as sticker prices go up.

…Overall retail sales are a trouble spot as purchases made by individual customers in showrooms have stalled this year, down slightly for the first seven months, according to JD Power. Auto makers are betting sales to government agencies, rental-car firm and commercial fleets will continue to grow.

…July’s results follow the sober view Ford executives gave last week when reporting second quarter earnings.

BT-AK221_CARSAL_9U_20160802134810

This is certainly a flattening trend from last year’s high, but I would tend to agree with the article’s assessment (quote), “this isn’t doomsday.” In other words, slowing, flattening and even headwinds is not the same thing as a crash, but in our projections for the coming year, we should at least take note and plan accordingly.

 

 

Residential Homeownership at More than a 50-Year Low

The Census Bureau updated its quarterly Housing Vacancies and Homeownership (CPS/HVS) and returned the following results:

Table 4 2016-07-28

As illustrated by the information in the table, homeownership in the U.S. continues to produce negative results as noted by the Wall Street Journal:

The U.S. homeownership rate fell to the lowest level in more than 50 years in the second quarter of 2016, a reflection of the lingering effects of the housing bust, financial hurdles to buying and shifting demographics across the country.

But the bigger picture also suggests more Americans are gaining the confidence to strike out on their own, albeit as renters rather than buyers.

The homeownership rate, the proportion of households that are owner-occupied, fell to 62.9%, half a percentage point lower than the second quarter of 2015 and 0.6 percentage point lower than the first quarter 2016, the Census Bureau said on Thursday. That was the lowest figure since 1965.

These last statistics are reflected in the interactive FRED chart below:


One very interesting element of the homeownership trend is the sociological shakeout among generational groups, with some results as expected, and others left for more in-depth studies:

NA-CJ738_GENX_9U_20160408150908

Source: The Wall Street Journal: http://www.wsj.com/articles/housing-bust-lingers-for-generation-x-1460142759

The full Bureau of Census report can be viewed here and the quarterly updates here.

Three Measures of Unemployment

The FRED Blog has an interesting assessment of unemployment, as measured by the 4-Week Moving Average of Initial Claims, Civilian Unemployment Rate and Average (Mean) Duration of Unemployment:

Take note especially of the Average (Mean) Duration of Unemployment – this corresponds to the “Scariest jobs chart ever” at Calculated Risk. From the FRED Blog using the analogy of the “unemployment bathtub”:

Economists often find a bathtub to be a useful metaphor for the behavior of unemployment. There’s some inflow of newly unemployed workers and some outflow as workers find jobs. A classic way to measure the inflow has been with initial claims of unemployment benefits, the blue line, in which we see spikes at the start of each recession. This inflow of newly unemployed persons initially reduces the mean duration of unemployment, the green line. But the green duration line rises as the blue initial claims line falls—since people who become unemployed early in the recession and remain so are unemployed for a while by the time the recession winds down. Every recession follows this pattern: Claims peak, then unemployment peaks, then duration peaks. The logic is essentially that of the bathtub: First it fills quickly; then, after some time, it begins to drain. But as this is happening, those left in tub have been there longer and longer.

The alarming measurement was just how long it took to reach pre-recession peak levels of jobs lost – a level reached “April 2014 with revisions.” Since we have met and exceeded this level for some time, the concerns now turn to issues such as the levels of employment (part-time temporary vs. full-time) as well as the “quality of jobs.”

FRED Blog: Declining Wage Component in GDP

Using the very simple computation, Compensation of Employees/Gross Domestic Product, FRED data shows some very interesting results over the last five decades:

Since the late 1960s, each run up in this measurement seems to be testing a high in the short run, then is followed by new declines. In some cases, sustained declines, with the last significant run up between the years of 1995-2000. The biggest question is why. The FRED Blog is the first to note that understanding this would require:

Analysis of (i) supplements to wages and salaries such as pensions and other benefits and (ii) proprietors’ income, which is earned by independent workers and business owners that compensates for labor and capital. What we are interested in is whether the decline has bottomed out.

Where are we now in this trend? Again, it is noted in the post, “that call is difficult. If you play with the graph by changing dates—for example, by ending the data in the year 2000 or 1987—you’d find a pretty similar situation in which the decline appears to have reversed.” What is also interesting is the proximity of the short-term high measurements to recessions.

FRB Atlanta GDPNow: Q2 Throttled Down Slightly

From the FRB Atlanta nowcast:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.5 percent on May 17, down from 2.8 percent on May 13. The second-quarter forecast for real residential investment growth declined from 5.3 to 2.5 percent after this morning’s housing starts release from the U.S. Census Bureau, the forecast for real consumer spending growth ticked down from 3.7 percent to 3.6 percent after this morning’s Consumer Price Index release from the U.S. Bureau of Labor Statistics, and the forecast for the contribution of inventory investment to second-quarter growth declined from -0.24 percentage points to -0.39 percentage points after this morning’s industrial production release from the Federal Reserve. The latter decline was concentrated in motor vehicle and parts dealers’ inventories.

NOWCast 2016-05-17Get the full dataset here and report here.

In a Knowledge Worker Economy – Risk OVER the Status Quo?

Nearly thirty years ago, Peter Drucker saw the need for and wrote of the imperative of change management within an information based, highly educated, “knowledge worker” economy and workforce:

To be sure, the fundamental task of management remains the same: to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change. But the very meaning of this task has changed, if only because the performance of management has converted the workforce from one composed largely of unskilled laborers to one of highly educated knowledge workers.

We live in a world obsessed with safety, and mitigation of risk. Inherently, there is nothing wrong with either of these elements, except for the fact that no matter how hard we try, we cannot guarantee either absolute safety or the absence of risk.

In an excellent post in the Harvard Business Review, as summarized in this morning’s Management Tip of the Day, the whole concept of risk versus safety is put to a challenge:

Most of us consider ourselves to be risk averse, but what we consider “safe” behavior often contains much more uncertainty than we suspect…The challenge is that there are very few environments that remain static. “Safe” investments like gold can lose value. You could be fired from your “safe” job. And yet we behave as if the current state will persist in perpetuity. While no one can predict the future, there are a few tactics you can use to get better at evaluating risk. Before you make a decision, do your research on all of the potential avenues of action. Ask credible experts to weigh in. And don’t forget to evaluate the inherent risk of doing nothing. Sometimes the status quo is actually riskier than taking a leap into the unknown.

Excellent advice, see the full post here. Of course, as noted above, risk must be carefully researched and thought out. To use an old word, to exercise prudence, which the Oxford English Dictionary defines as the, “ability to recognize and follow the most suitable or sensible course of action; good sense in practical or financial affairs; discretion, circumspection, caution.” In short, to exercise judgement when making a decision about the future. But too much caution, or worse, being restrained by fear amounts to the idea that we are actually in more control than we are, and that is little more than self-deception.

Hulu Expanding Skinny Options for Cord Cutters – First Step Toward True Broadcast Streaming?

A Wall Street Journal article confirms that, “Hulu is developing a subscription service that would stream feeds of popular broadcast and cable TV channels.” Although the specifics are still a way off, a couple notable highlights from the article:

    • Targeting around a $40 price point for monthly subscriptions, “Many [competing services] are seeking to deliver a subscription pay-TV package that includes a dozen or so popular channels for a price between $24.99 and $39.99″
    • Major networks are involved, “Walt Disney Co. and 21st Century Fox, which are co-owners of Hulu, are near agreements to license many of their channels for the platform…Disney’s ABC, ESPN and Disney Channel are expected to be available on the service along with the Fox broadcast network, Fox News, FX and Fox’s national and regional sports channels”

Competition is fierce, which is good for consumers as the rivals seek to hit a price point and array of options that make sense. The article notes Apple’s frustration with, “its efforts to license programming from big media companies at rates that would allow it to keep retail prices attractive to cord-cutters.”