The Japan Factor

We noted just a few days after the tsunami that its net impact on US activity would be minimal, perhaps a wash, that supply shortages to US industry, especially vehicle assembly, would be at least partly met by Japanese competitors, and at any rate, this negative would be offset by Japanese demand for concrete and other building materials later in the year. Today’s April Durables release indicated that vehicle production was off considerably, especially - no surprise - by those facilities owned by Japanese, due to component shortages. We may have under-estimated this factor, and it’s too early to judge if we’re right on demand from rebuilding.

Robert Craven