Many in the international trade industry were relieved to see an upward economic turn with the start of 2011; quarter one of this year saw an immense uptick in U.S. trade activity over the past year. Indeed, there have been unexpected setbacks that have hindered the economy’s strong recovery; political instability, natural disasters, and the aftereffects of such events are among the latest setbacks. Although we expect trade to continue with an upward path, there will surely be roadblocks along the way. Below we have highlighted some forecasts to expect for quarter two of this year:
1. Oil Prices Going UP
: The domino effect of the political instability in the Middle East will continue to influence the price of oil, which is likely to continue rising in quarter two. Shippers are already feeling the effects of the price increase and consumers will soon be paying ‘more for less.’ As we have seen in the past, when the price of oil increases, ripples are felt throughout the economy. With the uncertainty in the Middle East, it is difficult to predict how long these prices will continue their upward trend.
2. Japan Aftereffects
: With the Japanese recovery process in full swing, U.S. manufacturers fear a shortage of supply while shippers try to steer clear of radiation. According to the New York Times,
“Automakers including General Motors have slowed or stopped production at some plants…Other manufacturers like Nokia, the Finnish cell phone maker, have said they expect disruptions.” It is likely we will see shifts in international suppliers and increased prices to accommodate these shortages. Meanwhile, ships and aircraft that have stopped in Japan are being checked for radiation and importers around the globe are fearful of buying goods from Japan. The aftereffects will be felt hard around the globe in quarter two.
3. Optimism Remains
: Despite many challenges ahead for shippers and manufacturers, optimism remains as we expect a better second quarter than that of last year. Ripples in the trade community will be felt worldwide and a potential slowdown may occur, however the overall economic recovery is expected to continue.
Key economic factors, such as employment and consumer confidence, have shown improvements from last year. If positive numbers continue, the impact from the slowdown on overall growth will be subtle.