Global Economy Adjusting (Breakbulk Transpo 2009)

The economy is stabilizing but will take time to adjust to a "less spendthrift" consumer, and a rebound in U.S. exports may be led by agricultural commodities that require little labor to produce, an economist told The Journal of Commerce's Breakbulk Transportation Conference.

"As goes the American consumer, so goes the global economy," said Scott Frisby, senior economist at Moffat & Nichol. "What they're saying is that the outlook is poor and they're worried about income."

He said continuing claims for unemployment have peaked -- an early sign of recovery -- but that new unemployment claims continue to rise. Nervous about job security, consumers have reined in spending.

Low utilization rates for manufacturing capacity will remain a drag on unemployment but will help keep inflation in check, Frisby said. A challenge for the Federal Reserve will be to withdraw excess liquidity it has injected into the financial system to jump-start the economy.

The longer-term outlook for trade, however, is positive, he said. But he warned that the aging of the U.S. population will accelerate a shift from manufacturing to services.

He said the U.S. needs to narrow its trade imbalance but has lost competitiveness in manufacturing. He said that leaves agricultural commodities as a likely leader in U.S. exports.

Contact Joseph Bonney at jbonney@joc.com.