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LONG BEACH, November 17 – The US economy remains strong despite some concerns over inflation while imports from China are robust and likely to continue to grow, according to a leading international economist.

“We are not in a recession and we haven’t been in one this year,” Jerry Nickelsburg, Adjunct Full Professor and Director of the UCLA Anderson Forecast told a press conference hosted by the Port of Los Angeles.

His statement came as port executive director Gene Seroka announced the latest throughput numbers for America’s perennial number one gateway: a downturn of 25% from October 2021 and about 6% down for total traffic year-on-year to date.

Nickelsburg was not put off by those numbers, and offered an overview of positive economic factors and their potential impact on global trade, including along the trans-Pacific route, the most important for the Southern California port.

US economy growing

“The word ‘recession’ means to contract, to shrink,” he said, but noted that during the first two quarters of this year, “we had more people working in the United States every month in the first two quarters than in the previous month, than in the previous year. 

“We had more capital working. The utilization of that capital was at about the same level, and the number of hours that people were working was about the same level,” he said. “That doesn’t sound like a contraction.”

While acknowledging that inflation remains “worrisome”, Nickelsburg nonetheless sees the US economy on a speedy growth trajectory.

“If we go sector by sector and look at employment and look at output and look at the factors that are determining how the economy evolves in terms of the data, we see an economy that’s growing and it’s growing with some speed.”

Consumer spending up 

He acknowledged that US consumers are now diversifying their purchases away from goods, which predominated buying during the pandemic, and spending more on services. But he insisted that purchase of goods remains high – along with purchases of services.

“What’s interesting in the data is that we’re not shifting back to where we were on the trend line of increase in the purchase of goods. We’re still buying more goods than trend and we’re buying more services,” he said. 

He did acknowledge that “as we look forward, yes, we’ll probably get a little closer to that trend line, but I think there’s still good robust demand for goods.” 

US data shows growth

That view was supported by the latest data from the Commerce Department which showed that retail trade sales were up 1.2% from September 2022, and up 7.5% over 2021.  

“That was higher than expected and a promising reflection of consumer sentiment during the holiday shopping season, especially since the near-record-high inflation Americans have felt this year has moderated a bit,” The New York Times reported.

Nickelsburg expects that the “robust demand” for goods means more goods manufactured domestically, more from Mexico, more from Europe, but also more from Asia.” 

He acknowledged some potential to move away from China as a supplier of goods to the US, but said “we should keep in mind that over 25 years, US corporations and the Chinese government established one of the most efficient supply chains the world has ever seen.” 

Sino-US supply chain “hard” to replace 

Nickelsburg recognized that moving an entire supply chain is “hard” because a single factory can’t just be relocated from one country to another. “You have to move the entire ecosystem. And that ecosystem is very deep in China and very efficient and is quite extensive to move it.” 

He said that countries like Bangladesh or Vietnam “have a long ways to go before they can make a significant dent in this very efficient supply chain that’s been set up over the last 25 years in China.” 

As a result, Nickelsburg expects that imports from China will “continue to be robust and indeed continue to grow as the US economy grows. And the demand for goods out of China and out of Asia in general increases.”

‘Concerns’ still linger

He noted “concerns” over China’s zero covid policies, which have disrupted supply chains as the government resorts to total lockdowns of population centers to control outbreaks of the pandemic. 

But he said those issues are “starting to abate” because the industries in China are looking at “workarounds” to the lockdowns that they’re experiencing. Nonetheless, he cautioned that “we’re still concerned about zero covid interrupting supply chains.”

Photo: The Port of Los Angeles has seen declining throughput volumes in October. Photo courtesy of the Port of Los Angeles