The Bureau of Economic Analysis reported that real (i.e., inflation adjusted) gross domestic product (GDP) increased just 0.7%, which is an annualized rate, during the fourth quarter. The low reading was expected as most economic indicators pointed to weaker growth during the quarter. A drawdown in inventories reduced GDP by 0.45 percentage points during the fourth quarter. An inventory reduction also reduced GDP by 0.71 percentage points in the third quarter. While being a drag in the short run, inventories throughout the supply chain need to be reduced. So far the reduction has not been as large as we would have liked, which means GDP growth early in 2016 may be softer than expected as the inventory cycle continues.
The Conference Board Consumer Confidence Index®, which had increased in December, improved moderately in January. The Index now stands at 98.1 (1985=100), up from 96.3 in December. The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.2 percent in December to 123.7 (2010 = 100), following a 0.5 percent increase in both November and October.
"Nothing is ever lost by courtesy. It is the cheapest of pleasures, costs nothing, and conveys much."
– Erastus Wiman (1834-1904)
Ramp/Dock Report: January 2016
FMCSA's final rule, published on November 30, 2015, prohibiting motor carriers, shippers, receivers, and transportation intermediaries from coercing drivers to violate certain FMCSA regulations takes effect tomorrow, Jan. 29. The rule broadly defines coercion to include threats of or actually withholding business, employment, or work opportunities, or taking or permitting any adverse employment action.
The Cass Freight Index for December showed freight volumes dropping 4.9 percent from November. The decline was partly attributed to "bloated" inventories and slower replenishment cycles, as well as the manufacturing slowdown and a drop in freight demand from the energy sector. Another problem is high levels of inventory, especially in the U.S. Data released Jan. 15 by the U.S. Census Bureau supported claims that retail inventories remained unusually high in the first weeks of 2016.
Lessons from the Past
Once upon a time, North America almost divided along a very deep subsurface rift. Today, that rift system and the faults associated with it are known as the New Madrid fault zone. This fault zone is six times larger than the San Andreas fault zone in California and it covers portions of Illinois, Indiana, Missouri, Arkansas, Kentucky, Tennessee and Mississippi. Back in 1811 and 1812, four of the largest earthquakes in U.S. history struck that area of the country. The movement of the ground was so powerful that it changed the course of the Mississippi River and it rang church bells in Boston, Massachusetts.
In the known history of the world, no other earthquakes have lasted so long or produced so much evidence of damage as the New Madrid earthquakes. Three of the earthquakes are on the list of America's top earthquakes: the first one on December 16, 1811, a magnitude of 8.1 on the Richter scale; the second on January 23, 1812, at 7.8; and the third on February 7, 1812, at as much as 8.8 magnitude.
So could such an earthquake (or worse) strike today? Well, last year the U.S. Geological Survey released a report that warned that the New Madrid fault zone has the "potential for larger and more powerful quakes than previously thought", and the USGS also admits that the number of significant earthquakes in the middle part of the country has more than quintupled in recent years. We also know that the U.S. government and large corporations are so concerned about the potential for a major New Madrid earthquake that they have held major exercises that simulate one. Scientists tell us that it is just a matter of time until another super quake hits the region, and millions of Americans that believe that we will eventually see a New Madrid earthquake that will divide the United States in half.
"There will be famines and earthquakes in various places." Matthew 24:7
In loving remembrance of Ryan and Katie Smith who left us February 5, 2015.