Shipping activity at the Port of Los Angeles is showing signs of slowing, raising concerns about a broader economic cooldown. Yahoo Finance Senior Reporter Josh Schafer joins Market Domination Overtime to break down the port data.
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Well signs of an economic slowdown are materializing at U.S. ports. Yahoo! Finance Markets reporter Josh Shafer joining us now with a closer look at the numbers on the traffic and what we're seeing so far.
Yeah, so this has been an interesting one, Julie, because you kind of have these moments in the economic narrative where the data isn't necessarily telling the story that people feel like is out there in terms of right now we feel like there's perhaps an economic slowdown maybe already happening or coming, but when you look a lot of the other high frequency data, you're not really seeing that, right? And so one thing economists have been highlighting over the past week is data from the port of Los Angeles. So what we're seeing from data from the port of Los Angeles as far as weekly scheduled, uh, containers coming into that port, what you're looking at here is year over year growth. So you can see a big spike for that week that included April 20. Then you're seeing a large move down. So this is what a lot of economists have been talking about. They think we're going to see once we get more April data, which is maybe you had a lot of spending in March, then it sort of falls off a cliff to some extent, right? Because you had a lot of people essentially ordering before the tariffs come in. Now the question is of course what does that mean for the overall economy when you start to see this slowing down? And you actually recently spoke to Ryan Peterson from Flexport. He's the Flexport founder and CEO, and I thought he explained this rather well. So I want to take a listen what he had to say.
If it comes way back down then, you know, it'll be okay. The companies will rebook those containers and start moving the goods again. If it lasts in, you know, a few more weeks, certainly a few more months, you're going to start to see shortages. You're going to start to see bankruptcies, unemployment, uh, and really just a large scale recession like we haven't seen in many, many years.
So the it there that Ryan's referring to is tariffs, right? And he's saying, he's saying if tariff rates don't come down soon, you're going to continue to have this issue, and then sort of the economic way that this issue spins out, right? Guys, is if less things are coming into the US then things that are here are likely get more expensive. If things that are here are likely get more expensive, then my money doesn't go as far, right? So I probably buy less. Well, if I buy less, then maybe at some point the companies that are selling me stuff say I need less employees. And then you get your unemployment rise and that's sort of how the cycle works. So right now it's just a few weeks. We're just looking at shipment data, but it's one actual sign of literal economic activity that is slowing that I think we're going to be increasingly talking about in the weeks coming.
That's one so that's one indicator, Josh, but what there's other key indicators folks look at and you write about this like you talk about weekly filings for unemployment benefits. I mean, what what are what are those saying?
Yeah, so the weekly filings for unemployment, Josh, right now are really not telling you much, right? You've been sitting at about 220,000 for feels like a little bit over a month now. But what I think is interesting is just again to think about sort of how this works. It's probably going to take several months for those to start picking up, right? In terms of actual layoffs, you would need to see your business actually slow. And right now, even when you think about corporate earnings calls and what we're hearing from companies, it's not that their business has already slowed, they're worried about it slowing in a couple months, right? So is the layoff cycle a late summer layoff cycle, right? And that's sort of the cooldown period that you see, because again, you need to have a reason to lay people off, right? People don't just want to get rid of workers to get rid of them. You need to have some pressures that actually start to materialize. So it seems like that part of the story might actually be a little bit later, for instance, the jobs report this Friday isn't necessarily supposed to be that bad.
I think small businesses maybe will feel this first because they have less cushion. And we also could be in the interesting situation where even if say a month from now a trade deal is announced, it doesn't mean the tariffs will come down immediately, or even if they do, it takes a while to sort of feed through the system. So you could be in a situation where you get economic data that is deteriorating, but the markets going up because it's seeing those trade deals maybe coming through.
Right.
I mean, not that that's unusual, right? The market.
The market's going to look forward.
But still, it'll feel a little discordant if that's how it plays out.
Yeah, definitely. And I think to your point, when do the actual rates come down, right? I think it's sort of the looming question, not talk about these talk about deescalating, but when does the actual deescalation?
Exactly. Yeah.
