Some Recession Indicators Were Already Flashing Brightly in 2019
There are many forward-looking recession indicators worth watching. Trade traffic levels is arguably one of the best ones.
One of my more preferred recession indicators is the container traffic out of the LA area that Bill McBride of Calculated Risk regularly updates. It is one of our best pre- recession indicators as well as a useful coincident indicator. And way back at the end of 2018 it began rolling over.
Most markedly, the loaded in component began turning down decisively in the last couple months of 2019. This can give some idea of how poor demand in the United States is, how lousy international trade is, or both.
As one of the more prescient recession indicators to follow, compare the inbound traffic trends (blue line) in the twelve or so months leading up to the official start of The Great Recession, to the twelve or so months leading up to February, when the most recent data came out.
Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.
To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average