Cargo Decline Portends Consumer Weakness

The LA Times is reporting Cargo decline is another sign of slowing economy.

    Cargo containers crammed with foreign-made goods that were supposed to set a record in August at major U.S. ports took an unexpected turn, with imports sinking 1.4% in another sign of the slowing of the economy.

    Imports of items as diverse as toys and tiles could also be lower in September and October, when retailers will be stocking shelves for the holidays, because shell-shocked shoppers are expected to continue to pull back.

    [Mish Comment - See Consumer Credit vs. Weakening Demand for more on "Toy Wars"]

    The slump in oceangoing imports unloaded at the 10 largest U.S. container ports in August was the first drop since Global Insight began its monthly Port Tracker report in 2005. The number stunned some port watchers. "When I first saw these numbers, I called the researchers and asked them if they had left a column out of the spreadsheet. I thought it was a typo," said Craig Shearman, vice president of the National Retail Federation, which pays Global Insight to conduct the trade research.

    "The dollar has depreciated so much that American goods are more competitive," said Sung Won Sohn, chief executive of Hanmi Bank in Los Angeles. On the other hand, the import decline "tells you about what retailers are thinking about the holiday shopping season. They've cut back orders."

    Given the pressure on consumers' budgets, economist Scott Hoyt expects modest spending growth through the year. "As long as we continue to have at least decent job gains with tight labor markets, then we'll have enough growth and wage income to support positive spending growth," said Hoyt, with Moody's Economy.com.

What's Down?

    * Building material imports - down 20%
    * Furniture imports - down 17%
    * Clothing imports - down 10%
    * Footwear - down 8%

What's Gathering Dust in Warehouses?

    * Furniture
    * Light fixtures
    * Appliances
    * Anything related to home sales