Disruption Report #53: Thirty-Five Percent Chance of a Recession, White House Warnings, and Improving Conditions at West Coast Ports

35% Chance of a Recession

A Bloomberg headline caught my attention: “Goldman Sachs Sees U.S. Recession Odds at 35% in Next Two Years.” The article, written by Eric Martin, cites the Federal Reserve as the likely cause. Not through ill intent but due to the complexity of lowering the inflation rate while trying not to cause an economic downturn.

There is a reason for hope. The author notes that the end of Covid restrictions will help the economy, as will a steadying of durable goods prices.

The Toy Intelligencer Toy Stock Index Down 8% Year to Year

The Toy Intelligencer Toy Stock Index” calculates the combined value of ten toy industry-related publicly traded companies. The list includes Mattel, Hasbro, JAKKS, Build-a-Bear, Spin Master, Walmart, Maersk, Disney, and Intertek Testing.

White House Warns that the Supply Chain Will Continue to Be Vulnerable

The Council of Economic Advisers is cautioning that the global supply chain, or any supply chain, is vulnerable to man-made events like wars and natural occurrences like pandemics. Here is how The New York Times puts it:”

The result…are supply chains that are efficient but brittle — vulnerable to breaking down in the face of a pandemic, a war or a natural disaster.

Because of outsourcing, offshoring and insufficient investment in resilience, many supply chains have become complex and fragile. This evolution has also been driven by shortsighted assumptions about cost reduction that have ignored important costs that are hard to turn into financial measures, or that spilled over to affect others.”

“Building resilient supply chains, “

Based on what I am reading, best practices mandate a multi-faceted approach. A best plan of attack will be to engage a combination of offshoring, nearshoring and re-shoring. By building in some redundancy, companies will be better equipped to adapt to sudden shifts in the underpinnings of the supply chain.

Conditions Improving in Ports of Long Beach and Los Angeles

The Southern California ports are making headway in moving containers in and out of the port. According to a GCaptain article by Mike Schuler, “Port of Los Angeles Reports Its Third-Busiest Month Ever in March,the number of container ships waiting to unload has decreased from 109 in January to 44 at the end of March.

The ports are doing a better job of getting containers off the ships, but they are also increasing the number of containers leaving the port and forwarding to in-country destinations. The article states that there is a 31% decrease in the number of containers sitting in the terminals. The number of containers sitting for 9 days or more is down 46%.

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