Is it time to be (a little) concerned about the economy?

For more than a little while, much has been made of what has been viewed as strong economic growth. To what degree, though, varies based on the person or the source.

According to President Trump, as per his State of the Union speech in February, the economy is experiencing “an economic miracle,” whereas others note that while things have been relatively solid and stable, there are also some causes for concern.

That can be viewed in a few different ways, of course. When looking at the more encouraging parts, the pairing of record-low unemployment and steady consumer confidence, which many economists view to be a “fluid” metric, are clear drivers of optimism.

Also falling into this grouping could be the relatively strong state of industrial production and manufacturing, things that, along with consumer activity, are viewed as major freight drivers, to be sure.

On the surface, these things collectively look largely decent and encouraging, but there are some imperfections afloat, too, which, can, or should not be overlooked.

One thing is that since the third quarter of 2018, when U.S. GDP checked in at a robust 4.3%. But that was followed by the fourth quarter’s 2.6% reading and the first quarter of this year’s GDP is expected to be in the 2.2%-to-2.6% range (the official figure will be released later this month by the U.S. Bureau of Economic Analysis).

So, while things are still largely good, they are not necessarily great either, it seems. The aforementioned imperfections, or causes of economic concern, remain intact, too. Included on that list are things like: trade war/tariff concerns; oil and gasoline prices (both of which are heading up in recent weeks); and rising inventories, among others.

One of those “others” could be the winding down of the material impacts of the Tax Cuts and Jobs Act, too.    

That point was raised in a recent Tweet by freight transportation expert Larry Gross, president of Gross Transportation Consulting, saying: “Remember those predictions that the…tax cut was going to be 'rocket fuel for the economy?' Looks like the fuel tank was only big enough for a couple of calendar quarters.”

A similar point was raised by Donald Broughton, principal of Broughton Capital and author of the monthly Cass Freight Index Report issued by Cass Information Systems.

In the March report, Broughton observed that a three-month stretch of shipment declines, (from December through February, most recent data available from Cass) gives pause to the thesis of ecomomic growth, and Broughton pulled no punches in the report’s commentary,writing that: “While we are still not ready to turn completely negative in our outlook, we do think it is prudent to become more alert to each additional incoming data point on freight flow volume and are more cautious today than we have been since we began predicting the recovery of the U.S. industrial economy and the rebirth of the U.S. consumer economy in the third quarter of 2016.”

Not to be overlooked, as it relates to the state of the economy, is the state of the Chinese economy, long a major economic power, showing signs of strain, largely due to the “trade war” with the U.S, as well as Brexit in England, and other parts of Europe, like Italy, hurting.

Chris Rogers, research director for global trade intelligence firm Panjiva, cited declining exports out of China, which fell a cumulative 6.6% for the three-month period ending in February, coupled with the end of stockpiling that had been intact in the past in advance of “expected-and now twice delayed-increases in tariffs on Chinese imports” as main reasons for global economic issues at the moment.

And that could remain the case, he told LM in a recent interview, as a new U.S.-China trade deal, when it does happen, could continue to curtail import levels while inventories get worked through.

“These are the first signs of a broader economic downturn in global trade,” said Rogers. “One thing that is worrying to me is that it is not just a decline in shipments from China, it is also a decline out of Europe, South Korea, and Japan. There is a slowdown in shipments from several Asian countries. It is not a huge surprise, really. Every wave has its crest. And it is something U.S. businesses will have to deal with, as it is not the only nation with political issues. There is Brexit in the U.K. as well which is going to hurt trade. On a macroeconomic level, things are quite challenging.”

As one can tell, there is plenty to chew on in looking at the state of both the domestic and global economies. While things may not be as “booming” as they were considered to be not all that long ago, they are not as “dire” as some recent events suggest either. One thing that is sure, though, is that freight transportation, logistics, and supply chain activity are key players in all of this activity on a global stage, too. What’s more, to varying degrees, their collective output, as we all know, in many ways, serves as a proxy on economic output, so let’s buckle up and see where things go from here.