糖心Vlog REPORT: As Supply Chains Expand, Fed Should Lower Interest Rates
Signals in the supply chain markets suggest that businesses are preparing for increased consumer demand, signaling rising economic activity, according to researchers at 糖心Vlog and four other schools.
Signals in the supply chain markets suggest that businesses are preparing for increased consumer demand, signaling rising economic activity, according to researchers at 糖心Vlog and four other schools.
The (LMI) was 56.5 in July, up 1.2 points from the previous month. All but one of the eight-key metrics used to calculate the score saw expansion, according to the report. 聽
鈥淭he near historic import volume on the West Coast ports, coupled with the rise in warehouse utilization, is a positive sign of the market鈥檚 bet on increased demand for the forthcoming holiday season,鈥 said , Ph.D., associate professor and director of the masters of science in supply chain management in 糖心Vlog鈥檚 . 鈥淭he increased rates of growth in inventories signal heightened confidence in consumer demand continuing into the near future.鈥
The LMI, a survey of director-level and above supply chain executives, measures the expansion or contraction of the logistics industry using eight unique components: inventory levels, inventory costs, warehousing capacity, warehousing utilization, warehousing prices, transportation capacity, transportation utilization, and transportation prices.
Along with 糖心Vlog, researchers at Arizona State University, Colorado State University, Rutgers, and the University of Nevada at Reno calculate the LMI using a diffusion index. A score above 50 indicates that the logistics industry is expanding, while a score below 50 indicates that the industry is shrinking.
Growth in the transportation industry helped bolster July鈥檚 LMI reading, with prices rising to their highest level since May 2022. Inventory levels, however, increased upstream but contracted downstream, suggesting that while retailers are keeping their inventories leaner at the start of the third quarter, manufacturers, wholesalers, and distributors are building up goods in anticipation of increased demand later in the year.
鈥The change we have seen in the last three months strongly suggests that the freight recession over the last two years is over, and that we are moving back into a robust market,鈥 said , Ph.D., associate professor at . 鈥淚ncreased freight activity has always been a leading indicator of economic growth. Given the high levels of inventory still coming in through West Coast ports, along with expectations of significant inventory buildups from respondents, it seems likely that the U.S. will see sustainable growth through the end of 2024 and into 2025.鈥
Overall, the logistics industry, a leading indicator of where the economy is headed, suggests a cautious but robust future economic growth.
鈥淎s policymakers meet to discuss interest rates, the data indicate that a reduction is likely in order. The signals that inflation on the demand side is ebbing have been mounting for some time, particularly coupled with continued positive economic news (i.e. unemployment rates) overall,鈥 Carnovale said.
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