A tariff avoidance stockpiling rush is underway.
China Air Cargo Flights Soar
Bloomberg reports China Air Cargo Flights Soar as Trump Return, Tariffs Loom
There were 3,485 international cargo flights in or out of China last week, the most in data back to March 2023, just after China reopened its borders from several years of pandemic restrictions. That was the third straight week with more than 3,400 flights, according to the data from the Ministry of Transport.
China is in the midst of an export boom, with the value of shipments this year likely to hit a record. That may be further boosted in the time before Trump takes office in late January next year, as companies in the US try to purchase as much as they can before he imposes new tariffs on goods from China, Mexico, Canada and possibly other nations.
In the year through October, the number of freight flights rose 73% compared to the same period in 2023, according to official data, while there was an 8.3% gain in the number of ships moving goods in and out of China. Truck and train transport also saw double-digit increases.
What About Buyers?
That was easy to predict. But where are the buyers and supporting job growth?
Yesterday, I noted a Huge Negative Revision of $91.8 billion to Second-Quarter Private Wages
Due to Trump tariff threats, importers are likely padding as much inventory as they can before Trump hikes tariffs.
I expect a huge jump in inventories for the fourth quarter.
If buyers don’t show up for this stocked merchandise, merchants will get clobbered holding stuff people aren’t buying.
Updates to Second-Quarter Wages and Salaries
- Private wages and salaries are now estimated to have increased $65.0 billion in the second quarter, a downward revision of $91.8 billion.
- Personal current taxes are now estimated to have increased $39.8 billion, a downward revision of $15.5 billion.
- Contributions for government social insurance are now estimated to have increased $7.0 billion, a downward revision of $12.4 billion.
- With the incorporation of these new data, real gross domestic income is now estimated to have increased 2.0 percent in the second quarter, a downward revision of 1.4 percentage points from the previously published estimate. See lead chart.
The BEA explains “Today’s release presents revised estimates of second-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program.”
Quarterly QCEW Data Provides More Evidence of BLS Jobs Overstatement
On November 20, I commented Quarterly QCEW Data Provides More Evidence of BLS Jobs Overstatement
My prior comparisons and advance calls suggest we see negative revisions in nonfarm payrolls from 2023 Q2 to 2024 Q2 of well over one million. My initial stab is about 1.2 million to the downside.
The BLS Birth-Death model is seriously messed up an/or the BLS is oversampling large corporations and under sampling small businesses.
The BLS monthly nonfarm payroll reports are consistent garbage.
Reflections on BEA Revisions
If jobs overstated, income is too. And on Wednesday we found out the BEA overstated wages by a massive $91.8 billion from $156.8 billion to $65.0 billion.
This resulted in a downgrade in GDI growth from 3.4 percent growth to 2.0 percent in the second quarter.
It appears the BEA is incorporating BLS garbage into its reports as well. That massive 3.4 percent to GDI in Q2 was fiction as I suspected all along due to QCEW data
Two Big Economic Shocks Coming
On top of negative revisions, the key driver of job growth, immigration, will end. So will the surge in related government handouts.
For discussion, please see my October 6 post Government Jobs Rose by Nearly 1 Million Unadjusted in Sept, What Going On?
On an unadjusted basis government jobs rose by 984,000. The BLS says jobs rose by 73,000. A reader asked about this.
Also see my November 1 post Nonfarm Payrolls Rise a Mere 12,000 with Government Jobs Up 40,000
Job Stats vs One Year Ago
- Nonfarm Payrolls: +2,173,000
- Employment: +216,000
- Full Time Employment: -1,000,600
Second, a big consumer tax hike is coming assuming Trump does what he says.
So, we have already slowing job growth and now we have a migration shock and a tax hike shock coming just as nearly everyone has given up on the recession idea.
So good luck on that inventory stockpiling.