The holidays are around the corner, but we all know that commerce is a year round effort and for many retailers the holiday season has been in process for months now.  This is typically seen in port traffic starting as early as August when Santa’s elves start loading up that big sleigh…..well, what actually happens is big containers of ships bringing  material happiness from Asia start arriving at the ports of Los Angeles and Long Beach ready to unload goods destined for store shelves in November and December.

Except this year, something else has happened.  Data released this week showed that shipments coming into the LA, Long Beach and New York harbors are down more than 10% between August and October.  For economists, it sets off some head scratching and maybe a few alarm bells about the holiday season and the health of the overall U.S. and global economies.

There are two schools of thought among economists as to why this is happening.  The dour analysis looks at some of the weakness we saw in the last couple of months and interprets retailers as hedging their bets on a tough holiday season.  The other view is that this is just a catch up from inventory builds earlier this year.

In addition to some poor retail sales data recently, the global slowdown view had some support this week when Japan released data that showed a much weaker Q3 GDP than was forecast. GDP declined by 0.8% after falling by 0.7% in Q2, meeting the often-cited definition of a recession with two consecutive quarters of negative growth. This chalks up the second recession for Japan in the past three years.

On the more sanguine side though, the nation’s busiest ports are up 4% year over year in volume.  In addition, the National Retail Federation released a forecast in early October of an increase of 3.7% in holiday sales – significantly better than a 10-year average of 2.5%.

My View: Most likely the answer is a combination of the two explanations and is a reflection of what we have seen in the U.S. in particular for some time now.  We have a decent, and frankly very uneven economy, with some sectors doing very well and others lagging behind.  We’ll know soon enough though, as Black Friday is just next week, and we’ll be in hiatus next week at Global Perspectives – making time to do our part in boosting retail sales.

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