For much of the year, the country’s economic outlook has been grim, with the coronavirus pandemic sweeping through the U.S., taking a major toll on jobs, commerce — and the collective mood.
Now, as 2020 prepares to take its final lap, things have brightened a bit, at least for the time being.
Cargo is flowing into the Ports of Los Angeles and Long Beach in record numbers. Retailers are restocking empty shelves and rolling out glittery holiday displays. And consumers appear ready to shop again.
Or at least that’s the outlook of the National Retail Federation this month as key economic trackers are on a decided upswing, including — and perhaps most tellingly — recent numbers from the country’s largest port complex, in Los Angeles and Long Beach.
“People are more confident about their current and future circumstances,” said Jack Kleinhenz, chief economist for the NRF, citing data showing consumer confidence rising by about 17 points in September.
On Friday, Oct. 16, the U.S. Department of Commerce reported that retail sales were up by 1.9% in September from August, the fifth straight month of retail-sales growth at stores, restaurants and online.
And the Ports of Los Angeles and Long Beach, after seeing declining cargo volumes for much of the year, experienced a resurgence in August and September, two of the biggest months for holiday shipments.
In fact, the NRF’s monthly Global Port Tracker, which it released on Oct. 8, showed imports reaching an all-time high.
“August was a record month nationwide” for ports, said J. Craig Shearman of the NRF. “Cargo numbers are a good barometer of what retailers expect. They don’t import merchandise until they feel they can sell it so it’s a good sign of optimism.”
And it’s not just the winter holidays that could prove a boon for retailers, but also the fall’s spookiest one.
More than 148 million adults in the U.S. planned to participate in some kind of Halloween-related activities, despite restrictions against gatherings meant to stem the spread of the coronavirus, according to a survey by Prosper Insights & Analytics, which NRF included in a September consumer report.
“Those who are celebrating plan to spend $92.12 on average compared with $86.27 in 2019,” the report said.
Christmas shopping also appears to be getting an early start, with online shopping expected to be even bigger than usual this year and many retailers expecting those who do shop in person to avoid crowds as best as they can.
“Nothing about this year is predictable,” Jonathan Gold, NRF’s vice president for supply chain and customs policy, said in a news release. “But retailers are making sure their shelves and warehouses are well stocked for the holidays.”
Still, the pandemic, as Gold hinted, injects some uncertainty into how this holiday season will play out.
Earlier this month, a panel of 52 economists, according to the National Association for Business Economists, lowered its forecast for the rate of growth in the last three months of this year and in 2021.
Economists cut their forecast for October-December growth to a 4.9% annual rate from a prior June estimate of 6.8%, indicating slower growth than initially expected.
And jobs have been slow to return
Unemployment claims rose 53,000 in the week ending Oct. 10 compared to the previous week, according to the U.S. Department of Labor.
The pandemic’s unpredictability — no one knows, for example, whether another coronavirus surge will happen, leading to another round of shutdowns — also makes forecasting the economy’s long-term recovery difficult, Kleinhenz and other economists say.
But the good news is this: In what has been a very grim year, the fourth quarter of 2020 is shaping up to be a much-needed balm for both the economy and the collective mood, thanks to the holiday season.
One needs only to look at the spectacular cargo numbers at both the Ports of Los Angeles and Long Beach recently.
September, along with the entire three-month third quarter for this year, will go down as the busiest in the Port of Los Angeles’ 114-year history, for example. The LA port saw its cargo volumes increase by 13.3% last month over September 2019.
The Port of Long Beach, meanwhile, reported a 12.5% jump in September container volumes.
Directors of both ports said they expect a very strong fourth quarter, a sharp rebound from spring and summer when the coronavirus pandemic hit both the U.S. and China — America’s primary trade partner — hard.
For the men and women whose livelihoods depend on the ports, those early 2020 months were devastating as work hours — and paychecks — dwindled.
But August and September surged back.
“The early predictions were that October was going to be a slow month for us,” said longshore worker Drew Guttierez of International Longshore and Warehouse Union Local 94. “We’re halfway through it and we’re still in the fast lane. Once ships arrive, we race to get those containers off, the facilities are maxed out. We’re even seeing some new satellite yards opening up for the overflow.”
Kleinhenz credited the government stimulus funds, in part, for fueling much of the end-of-the-year optimism.
“The stimulus provided the fuel that’s helped to snap back” parts of the economy, he said in a telephone interview last week. “We’re starting to see an improving labor market.”
The supply-chain “speed bump,” in which fewer goods were arriving in U.S. ports during the early months of the pandemic, has been cleared for now, Kleinhenz said, and cutbacks in spending on such things as entertainment, dry cleaning and fancy clothes have provided some extra cash to spend. Some families also were able to bank their personal stimulus checks as savings.
A decent stock market performance through the pandemic months also has had the effect of making people “feel a little bit better off,” Kleinhenz said, with a strong housing market also helping.
Stores, meanwhile, are trying to capitalize on the optimism, with retailers such as Target pushing special “deal days” earlier this season.
“Retailers are ready for the consumer,” Kleinhenz said.
Spending trends and what drives them, however, remain difficult to parse, particularly amid the pandemic, he added.
“There’s not a clear and precise vision ahead,” Kleinhenz said. “It’s unsettled.”
The country’s economic recovery could be a slow one, or as Kleinhenz described it, “elongated,” with pre-pandemic stability not returning until late 2021 or even early 2022.
But, for now, there is a short-term bright spot: The holidays are coming.
And based on the booming business at the Ports of LA and Long Beach — the two largest in the country — consumers are ready.
“After staying home for much of the spring,” LA port Executive Director Gene Seroka said during a recent news conference, “consumers are buying again.”
Source: Orange County Register
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