A Questionable Transition into Summer
The problem starts with cargo ships. Because no one wants to pay 145% tariffs unless they absolutely have to, a lot of cargo originally destined for the US will never leave an Asian port. Three weeks later, the US West Coast ports suddenly are operating at much lower levels (current Long Beach estimates are for a 25% year-to-year decline in May). This leads to temporary employment cuts at the ports, but also leads to less need for further domestic shipping (i.e. trucking and rail). Which leads to more temporary employment cuts. Meanwhile, no new product shows up at retailers, leading to eventual product shortages and further temporary employment cuts.
Employment cuts lead to less discretionary income and less spending in the overall economy, which starts a slow downward spiral where future orders are lowered, thus future cargo ships don’t get loaded in SE Asia for the US, and on and on.
June is going to be the start of a very difficult time!
Hogan may be writing about photography gear, but his sentiment rings true for the rest of the economy.