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Supply
Chain by the Numbers |
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- March 8, 2017 -
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Robots to Make Huge Gains in Distribution Applications; Amazon Impact on Brick & Mortar Could Quickly Double; US Productivity Growth Remain Worrisomely Anemic; US Trade Deficits with World, China Jump |
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Oddly, that was the tiny gain in overall US productivity in 2016 - the lowest level since 2011. That according to the latest data released this week from the Labor Dept. Productivity measures output per hour worked. The news wasn't much better in manufacturing, with productivity gain of just 0.3% last year. Gains in productivity have slowed in recent years for reasons economists are struggling to understand. The rise was just 0.9% in 2015 and 0.8% in 2014. Since 2007, productivity has grown by an average 1.2% a year, compared to an average 2.6% from 2000 through 2007 and 2.1% from 1947 through 2016. The recent performance is a real problem, as productivity gains are key to overall economic growth and competitiveness, as well as the ability of employers to increase wages. In fact, slower productivity growth this century is a major factor behind stagnant growth in household income. Business investment has really slowed in recent years, which may be one of the factors in the dismal productivity gains. Some say that with a changing economy, there may be some measurement error, but that is much more a theory than a quantifiable fact at this point.
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$48.5 Billion |
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That was the US trade deficit in January, according to numbers released this week by the Commerce Dept. That was up 9.6% from December - and the largest monthly gap since March of 2012. US exports were up slightly (0.6%), but that gain was overwhelmed by a 2.3% rise in imports, led by mobile phones, oil and foreign-made cars. The continuing strength of the US dollar plays a key role in both the export and import numbers for January. Oil imports were up mostly due to rising prices. Naturally, the US trade deficit in goods with China continued on, up 12.8% to $31.3 billion, the highest level since September. The figure reflects a big rise in imports of mobile phones, clothing, televisions, toys and games. But the trade deficit in goods with Mexico actually fell, down more than 10% from December to $3.98 billion for the month. What drove that decline is not clear, as the peso continues to fall against the greenback. The numbers show just what a challenge it will be for the Trump administration to reverse the trend as promised. |
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That is one recent estimate (from the Wall Street Journal) of Amazon.com's North American segment sales in 2019 - about double the $79 billion in NA sales it had in 2016. That assumes a 25% annual growth rate over those three years - not at all unreasonable after those NA sales grew about 25% in 2016. The key point: if something like that would occur, it means that in just three years Amazon would have again the same impact on brick and mortar retail as it had in all of its more than two decades of operations. Or said another way, all the turmoil that has been caused by Amazon in North American retail from its now $79 billion revenue line would be doubled if Amazon sees sales grow another $75 billion or so in just three years. The WSJ notes some analyst predict Amazon's NA sales growth will fall to 18% in 2018 and decelerate thereafter, as the law of large numbers actually catch up with Amazon at last, but that of course would still be dramatically faster growth than brick and mortar retailers would see. What will the US/NA retail landscape look like in 2020 or 2025? A lot different than today, that is for sure. 
