Real Economy

Real Economy

Because the global economy right now, once you step back from the disarray, could best be described as something like a bad joke, it might take a joke to point out what’s happened and how a recovery will take shape.

We’re thinking here about the one in which two economists walking down a sidewalk pay each other $10,000 apiece to eat trash they find on their path.

For all their efforts, each ends up with no more money than they started with but, one reasons, they’ve created $20,000 of economic activity.

That’s a distressingly accurate description of the empty economic activity that pumped up fortunes from Reykjavik to Wall Street. But it also suggests the sharp contrast between that now-deflated economic bubble and the very real activity, measured in industrial production and the movement of goods, that marks the transportation and shipping world.

That’s why we were heartened by the comments from Jim Rogers, co-founder of the private equity giant Quantum Fund, who told Business Week in a recent interview, “The people who produce real things” will be the winners in a changed global economy.

Even with cranes sitting idle at the Port of Los Angeles this month and a couple of miles of railcars parked on sidetracks along the uncharacteristically quiet Northeast rail corridor, there was promising news recently in what we’d like to call real economic activity.

That includes a report from the Association of Equipment Manufacturers that U.S. exports of construction equipment actually grew 20 percent last year — yes, something other than credit defaults and unemployment claims grew.

And it includes some of the first reports in several months that shipping in trucking and other industrial sectors grew from month to month after the frighteningly low reports in December that suggested an industrial standstill.

The most encouraging events in the transportation arena — in the form of stark announcements in the container shipping and trucking industries — may also have been those shippers found the hardest to see as encouraging. But they also carry signs that some major industrial leaders see an economic turnaround on the horizon.

When Maersk Line, followed by Hanjin Shipping, abruptly announced rate increases last week, they sent a message to customers and competitors alike that the days of shipping prices down to zero were over. Although shippers might bristle and even bolt over the higher rates amid a downturn, Maersk and Hanjin were showing the kind of confidence in the market and in their own long-term financial health that even a cost-cutting manufacturer can admire.

And when less-than-truckload carrier Con-way slashed its costs last week, it did so by reducing pay, saving the largest cuts for executive salaries. Even with falling shipping volume, Con-way rejected a repeat of the layoffs the carrier imposed only last December, signaling they will be around with the scale shippers will need in a recovery.

The carriers are focused more than ever on real economic activity. Now they just need the rest of the economy to do the same.

Paul Page is editorial director of The Journal of Commerce. He can be contacted at