Leveraging Clarity

By now it’s accepted wisdom bordering on cliché that the global trading economy lacks clear direction, and that the sputtering recovery and broad uncertainties in the United States and Europe leave logistics and transportation operators trying to plan in a fog.

Big economies don’t really move aimlessly, however, and it’s critical to look at the often minor fluctuations as breaks from the very clear direction of the larger economic.

The U.S. economy has been sending some very clear signals for several months, and it’s becoming increasingly difficult to look at the signals and imagine uncertainty in the market. Any uncertainty may come from the apparent disconnect between the economic stumbles in Europe and Asia and the steady expansion in the United States, but the reasons behind that seeming contradiction also are becoming clearer than ever.

The figures from the American Trucking Associations showing the strongest year-over-year growth in December in domestic truck tonnage in 13 years weren’t a phantom. No one should discount inventory restocking, but the best thing for domestic truck business is industrial production, and U.S. industrial production has been growing fairly steadily — with a few of those blips — since the middle of 2011. The 0.4 percent increase in December included the strongest growth in factory production in the past year.

Is that disconnected from the struggling international trade economy? No. Growing U.S. manufacturing likely is benefiting, in fact, from the changes coursing through the rest of the world, including the growth of China’s consumer class. U.S. “manufacturing has benefited from exports to emerging markets, including China,” State Street Global Markets investment strategist John Herrmann told Bloomberg News. “The more resilient those economies are, the better it is for U.S. manufacturing.”

But deeper patterns in the U.S. economy itself are pulling the country toward a stronger recovery. McKinsey & Co. described those patterns in detail in a report issued this month, “Debt and Deleveraging: Uneven Progress on the Path to Growth.”

That progress, McKinsey says, is uneven on the broad international level, where countries are seeing varying progress toward recovery from the crushing downturn of 2008-09. But uneven progress doesn’t mean a lack of clear direction, of clear causes and effects, in those countries, and that’s especially true in the United States.

The U.S., McKinsey says, has been more successful than most countries in deleveraging, or sloughing off the huge debt that came with the credit bubble that burst in 2008. The debt under discussion is not the government debt that’s been the subject of so much heated political rhetoric, but the debt held by households, corporations and financial institutions that became a chokehold on the economy when the bubble burst.

“Debt in the financial sector relative to GDP has fallen back to levels last seen in 2000, before the credit bubble,” the report says. “U.S. households have reduced their debt relative to disposable income by 15 percentage points, more than in any other country; at this rate, they could reach sustainable debt levels in two years or so.”

That’s probably why we heard from one shipping line last week that it has “very interesting bookings” from several shippers over the next several weeks. Unless those shippers are operating in a fog, they seem pretty clear on where the economy is headed.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at ppage@joc.com. Follow Paul Page on Twitter, www.twitter.com/paulpage.

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