The Great TEU/GDP Scandal of December 2021

By Jock O’Connell

News of an outrageous, if ultimately preposterous, conspiracy involving the Port of Los Angeles and the Biden administration drifted my way during the late afternoon of January 27. I was idly, almost absentmindedly scrolling through Twitter, a diversion I’d been resorting to largely to avoid the Wordle obsession that has tragically claimed so many productive minds. It was a Thursday and, memorably, the day on which the Port of Los Angeles had finally gotten around to posting its December cargo statistics.

Like others who track maritime trade statistics, I had been more than mildly irked by the Southern California port’s sluggishness in sharing its December TEU tallies. But whatever irritation I felt did not lessen my astonishment at what popped up on my computer screen from a Twitterer who had nearly 168,000 followers and a strong affinity for Donald Trump. Here’s how the thread read, albeit leavened here with my unvoiced comments:

(1) Remember me asking why the Port of Los Angeles was not updating their December CARGO results? Remember me asking about why this unusual delay? No, but please go on.

(2) The BEA released their fourth quarter GDP data today. Yes, the Bureau of Economic Analysis reported that U.S. GDP had risen at an annualized rate of 6.9% in the last quarter. It was in all the papers. The Wall Street Journal described it as the quickest rebound from an economic downturn in decades. But what does the BEA report have to do with LA’s tardy container statistics?

(3) A few hours later, again today, the Port of Los Angeles finally released their December totals. You know why that matters? No, but I fear you’re about to educate me.

(4) Because imports are deductions to the GDP equation. By holding back the Dec port data, the import number to the BEA equation couldn’t be deducted, The GDP data is manipulated (inflated) by not deducting the value of the December imports. You obviously have no idea what you’re talking about, do you?

(5) Wasn’t there a recent visit to the port of LA by someone attached to the White House. Someone with a vested interest in manipulating the economic data to fit a fraudulent effort that began in October??? [At this point, the Twitterer posted a photo of Transportation Secretary Buttigieg, touring not the Port of Los Angeles but the Port of Long Beach next door. But, hey, whatever.]

From there, the thread scampers down a rabbit hole. Fiddling with the December trade numbers, it turns out, was just the tip of the iceberg (or maybe the coat of rust on the hull of the Queen Mary). Trotting out performance data from the two San Pedro Bay ports, the Twitterer directed the attention of his numerous followers to the nearly steady ebbing of imported boxes since last May’s peak. The numbers, the Twitterer insisted, revealed the depth of the conspiracy. Despite a growing fleet of container ships waiting offshore, the two ports handled almost 240,000 fewer imported TEUs in December than they had in May.

The conclusion, the Twitterer boasted, was unmistakable. The scheme to inflate GDP numbers was months-old, which the Twitterer submitted should come as no surprise given “the ideological outlook behind the people running the Port of Los Angeles, the politics of California, and the influence of White House supply chain task force member John Porcari as Ports Envoy.”

So, apparently, we’re to believe that the Biden administration and its running-dog lackeys at the Port of LA had been colluding for months to slow the pace of imported containers not only at LA but at neighboring Long Beach? And all for the sake of producing reports on the state of the nation’s economy that flattered Joe Biden, but which were actually bogus?

The key incendiary lesson the Twitterer’s followers presumably took away was that the shelves down at the corner store are empty and food prices are rising solely because the White House wants to keep GDP high by keeping imports low. Quod erat demonstrandum.

What to make of this? It would be easy to shrug this nonsense off as a classic example of taking a little knowledge the wrong way. Shortly after issuing this expose, the Twitterer meandered off to celebrate militantly unvaxxed Canadian truckers. Shiny objects seem to be an occupational hazard among the Twitterati.

But what’s disturbing is that a cockeyed theory that Joe Biden had somehow persuaded LA Port Chief Eugene D. Seroka to stifle the December container count received 6,134 ‘likes’ and 4,286 “retweets” over the next few days. The Twitterer was almost correct in one regard. Imports (i.e., goods produced elsewhere) are a negative in calculating GDP. After all, GDP stands for Gross Domestic Product.

But that doesn’t prove that the Biden administration, in collusion with his co-conspirators at the Port of LA, delayed reporting the port’s December TEU statistics so that BEA could goose the fourth quarter GDP number with doctored data. Nor does LA’s delay in going public with its December trade numbers establish that the White House and its ideological lapdogs at the Port had been conspiring all fall to thwart imports and thus slash the numbers that would reduce GDP.

Why is that? Because not the least of the cavernous holes in the Twitterer’s argument is the central fact that BEA does not use container traffic data from the ports in calculating the nation’s GDP. Indeed, had the ports been the source of import statistics used by the BEA, the distortion would have been greater than the Twitterer had even imagined. For it was not until the second week of February that the Port Authority of New York/New Jersey posted its December container counts.

In reality, the Bureau of Economic Analysis obtains its import/export numbers from the Foreign Trade Division of the U.S. Census Bureau, which tabulates the data shippers routinely submit by law to Customs and Border Protection. In adding (or subtracting) the various components that make up GDP, BEA doesn’t count numbers of containers (which typically contain goods with very wide valuations). There is no need to withhold a GDP report until all TEUs have been counted because TEUs don’t factor into the analysis. It’s rather the chief metric used by the maritime shipping industry to manage space on ships and on shore.

Yes, I can anticipate the Twitterer’s rejoinder. What difference does it make if BEA doesn’t need container traffic data from the ports but instead uses Census Bureau figures? They’re all just gubmint numbers, which clearly can’t be trusted. There’s a conspiracy here and if it isn’t taking place down at the ports, it must be taking place somewhere else. Maybe even in the basement of a Washington, D.C. pizza shop.

Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.