JOC Economist Lowers 2012 Import Forecast

Expectations of a sluggish U.S. economy led Journal of Commerce Economist Mario O. Moreno to lower his forecast for growth in U.S. containerized imports next year to 2.8 percent from his previous prediction of 4.7 percent.

Next year’s import volume is expected to total 17.4 million 20-foot equivalent units, well above 2009's 14.5 million TEUs but short of the 18.6 million TEUs recorded in the pre-recession peak years of 2006 and 2007.

Trans-Pacific imports, which account for some three-fourths of the total, are expected to rise 2.7 percent next year. Moreno’s previous forecast in at the end of the third quarter called for a 5.9 percent increase.

The downward revisions reflect expectations of slow economic recovery and an increase in real GDP next year of only 1.3 percent.

Containerized imports are expected to be flat in the current quarter and rise year-over-year by just 1.3 percent in the first quarter of 2012, Moreno said.

The spike in retail sales at the start of the current holiday season is likely to fade amid continued weakness in jobs and housing markets and a “high probability” that the current payroll tax cuts won’t be renewed in 2012, Moreno said.

A fragile housing market will continue to slow imports of furniture and home goods whose sales often accompany housing sales, he said. Backlogs of foreclosures, tight credit standards and high unemployment continue to depress housing prices and sales.

“A true recovery for housing must be supported by a significant improvement on employment, and not solely by lower mortgage rates and affordable home prices,” Moreno said.

He said he expects unemployment to average 8.4 percent next year. High unemployment also affects retail sales, which Moreno said is likely to cause declines in import of consumer goods such as toys, apparel and footwear in the fourth quarter.

“The outlook for consumer spending in 2012 looks very soft,” Moreno said.

In addition to high unemployment and a strong possibility that Bush-era tax cuts and payroll tax reductions won’t be renewed, recent $100-a-barrel oil prices threaten disposable income, he said.

On the plus side, Moreno said he expects auto parts imports to rise in 2012 after robust gains this year. But he said the revival in domestic and export demand for U.S. vehicles could be undercut by rising fuel prices. Other wildcards include Europe’s sovereign debt crisis and the threat of a default that could discourage global lending.