The good news, according to the Port of Long Beach: There appears to be a low risk for recession.
The warning: rising geopolitical instability.
Those were the main points in a 2024 economic outlook focused on the Port of Long Beach presented on Monday, Feb. 12, during the regular meeting of the harbor commission.
Kim Ritter, an economist in the Port Planning Division, characterized the outlook as “guardedly optimistic” as she provided a brief overview of major economic markers, including consumer trends and outlooks from 2019 to last month.
“The economy is actually doing pretty well just based on the (Gross Domestic Product),” Ritter told commissioners, adding that it has “surpassed most expectations.”
For both the ports of Long Beach and Los Angeles, the question will focus mainly on the flow of cargo, which relies on consumers continuing to purchase goods.
Port of Long Beach CEO Mario Cordero noted that cargo movement remains up over comparable months last year so far (expected to be by some 15% in the case of January 2023 compared to January this year). Together, he said, both the ports of Los Angeles and Long Beach moved 1.4 million container units in January. Specific numbers will be released soon for January comparisons.
Business investment, Ritter added, has held steady and expectations indicate a small GDP (2%) growth this year.
“It’s slowing down a bit,” Ritter said, “but it’s still a respectable number.”
Consumer confidence, meanwhile, reveals a “lingering unease,” Ritter said. “It’s been a very stressful few years since the pandemic so it’s going to take people a while” to believe the economy is stable.
Wages have gone up and unemployment remains low, Ritter said, though high credit card debt is causing concerns.
“We are starting to see delinquencies inch up,” she said, “especially with auto loans.”
And while a recession now doesn’t appear likely, Ritter said, that’s not a guarantee.
“The unemployment rate is at 3.7% so there’s your soft landing,” she said. “But not everyone agrees we will avoid a recession this year or in 2025.”
Fiscal policies could bring headwinds in the coming year, she said, as the federal government may be forced to deal with the rising deficit.
“We finally will need to begin to tackle that,” Ritter said, “and that alone could begin to slow the economy.”
Some stress also appears to be rising in global supply chains, Ritter said, from rising shipping costs — which could reignite inflation — primarily connected to tensions surrounding the Middle East, Panama Canal and Taiwan.
“However, we’re not looking at anything close to the disruption” that occurred during the pandemic, Ritter said, which basically turned the San Pedro Bay “into a parking lot for container ships.”