By Brendan Murray (Bloomberg) — The U.S. economy is unlikely to snap back quickly and may not return to normal until 2021, according to the chief of one of the nation’s biggest ports, after a government report raised hopes for a faster-than-expected rebound from a pandemic-induced recession.
Even after the Labor Department’s surprisingly positive numbers Friday on employment in May, “I’m still not convinced that we’re going to have a V-shaped recovery,” Mario Cordero, the executive director of the Port of Long Beach, said in an interview.
Long Beach and the Port of Los Angeles are the main gateway for trade between the U.S. and China, which spent much of 2019 in a tariff war that disrupted transpacific shipments before the global outbreak of Covid-19. The pandemic first caused supply shocks that severely constricted trade between the world’s two largest economies. Then came a slowdown in demand.
While “there’s evidence of recovery” and it’s promising that “we’re going to have gradual numbers” improving, “I think we’re definitely a year away from some sense of normalcy,” Cordero said.
California’s San Pedro Bay port complex, which includes Long Beach and Los Angeles, saw 61 canceled sailings of container ships in the first quarter, compared with 31 in the same quarter a year earlier. So far this quarter, there have been 49 cancellations, nearly five times the number from April through June of 2019.
Cordero said the drop in shipping container volume through Long Beach is slowly getting less severe. In April, volume was down 17.3% from a year earlier, but last month’s figures might not be as bad.
“Preliminarily, it’s been reported to me that we’re going to have a better number than April,” he said. “If it’s going to be a negative number it’s going to be very low, so I’m hoping that the final number comes in as a positive number.”
Swings in trade tend to track the economy’s overall performance. Commerce Department figures this week showed the sum of exports and imports as a share of GDP declined to 19.6% in April, the lowest since February 1993. Total trade’s portion of GDP was as high as 32% in July 2008.
Bloomberg Economics is predicting a GDP plunge of 36.6% this quarter, down from a 5% contraction in the first quarter.
Cordero said his outlook for a gradual recovery hinges on trade relationships not worsening.
President Donald Trump, during a visit to Maine later on Friday, took aim at the biggest U.S. markets across both oceans, threatening to impose tariffs on cars from the European Union and on unspecified Chinese products unless both reduce their duties on U.S. lobster.
–With assistance from Jordan Fabian.
© 2019 Bloomberg L.P