There Is Reason For Economic Optimism

Posted by Land Link Traffic Systems on May 13, 2021 9:19:50 AM

Economic Outlook for 2021

There is certainly cause for optimism for the U.S. economy in 2021. A majority of vaccinated citizens, the restart of our manufacturing base and, thanks largely to stimulus and unemployment assistance, disposable income is everywhere. The economic indicators are all encouraging but inflation indicators are concerning some experts.

US Market Manufacturing PMI Revised Slightly Lower

The IHS Markit US Manufacturing PMI was revised slightly lower to 60.5 in April of 2021 from a preliminary of 60.6 and compared to 59.1 in March. Still, the reading indicated a robust improvement in the health of the US manufacturing sector, and the steepest since data collection began in May 2007. Overall growth was supported by quicker expansions in output and new orders, with the latter rising at the sharpest pace since April 2010. The headline index was also pushed higher by unprecedented supplier delivery delays (ordinarily a sign of improvement in operating conditions). Raw material shortages also led to the fastest rise in cost burdens since July 2008, with firms seeking to pass on supplier price hikes through marked upticks in output charges. Meanwhile, business confidence moderated, amid concerns regarding supply chain disruptions and strains on future production capacity.

US Factory Activity Rises at Record Pace

The IHS Markit US Manufacturing PMI edged up to 60.6 in April of 2021 from 59.1 in March, beating market forecasts of 60.5, preliminary estimates showed. The reading pointed to a record growth in factory activity, amid a sharp rise in output but many firms stated that production capacity was hampered by an inability to source raw materials and inputs in a timely manner. Capacity issues at suppliers and ongoing port delays reportedly exacerbated supply chain disruptions. Subsequently, backlogs of work rose markedly. Meanwhile, input costs increased at the sharpest rate since July 2008 due to severe supplier shortages and marked rises in transportation fees. Output expectations regarding the year ahead were markedly upbeat in April. Hopes of an end to the COVID-19 crisis and the release of further client demand as markets reopen reportedly drove confidence.

Logistics Industry Supporting The Recovery

The Logistics Industry generally follows the domestic manufacturing levels. If you manufacture goods, you generally need to ship them. The Logistics companies who managed to survive the pandemic are busy as they have ever been. Those who did not survive, along with the ongoing driver shortage, have created an equipment shortage across the industry.

Logistics planning will be critical moving forward to ensure you have equipment available to ship your finished goods. Look to Land Link Traffic Systems to help you plan your supply chain in this demand driven market. Visit us @ www.

Inflation Signs Are Nearly Everywhere

Pandemic related shortages along with a strong consumer demand coupled with billions of new stimulus and unemployment dollars is causing significant increases in demand for consumer products. The energy sector, specifically gasoline, is seeing increases as well. These conditions are perfect for a lengthy bout of inflation in the U.S. economy.

The question is whether the coming wave of inflation will be a modest, easily managed wave or a dramatic flood that will roil markets, kneecap savers and cause the Fed to rapidly hike rates, imperiling the recovery.

Many financial professionals aren’t overly concerned that inflation will spiral out of control, especially since the economy has plenty of post-pandemic ground to make up. The administration of President Joe Biden is pinning its hopes on the idea that we’ve moved into an era of easy money without consequences.

But there are plenty of other observers who worry about a replay of the grim days of stagflation in the late 1970s and early 1980s, when inflation spiked and the economy stalled. 4th quarter of 2021 should tell the tale.

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Michael Gaughan
Technology Officer
Land Link Traffic Systems


Topics: Third Party Logistics, Intermodal Freight, Maximizing Routing Efficiencies, Logistics News