A sustained recovery in trucking depends on a strong manufacturing sector. Increased orders in recent months point to a near-term rebound in manufacturing-related hauling.
For three years or so, economists have predicted a rebound in the second half of the year. These optimistic projections often seem based on an unlikely simultaneous occurrence of numerous positive factors akin to drawing into an inside straight flush. You really can’t blame these pundits. Psychology plays a significant role in the economy, so it’s natural to accentuate the positive.
Today, however, it hardly seems necessary to puff up the economy. In the third quarter of 2003, for example, the gross domestic product (GDP) grew at an annualized rate of 8.2 percent. Some of that growth surely came from a one-time boost in incomes due to the child tax credit refunds mailed in July and August. But business spending on equipment and software rose nearly three times as fast as personal consumption, according to data compiled by the Department of Commerce’s Bureau of Economic Analysis.
Finally, the economy has found its missing ingredient. Consumers have stubbornly kept the economy from floundering, and housing starts – driven by low mortgage rates – have remained relatively strong for several years. But now, the other side of the economy seems to be starting an upswing.
“Businesses are beginning to invest again,” says Bob Costello, chief economist for the American Trucking Associations. The last time businesses truly were in an investment mode was in 1999 as they prepared for the Y2K bug, he notes. The confidence of the business community shows in the stock market. The Dow Jones Industrial Average, for example, has been steadily rising and is within striking distance of its record.
“I think 2004 definitely will be better than 2003,” Costello says. “There will definitely be an increase in volumes.”
“Monetary policy, fiscal policy and fairly dramatic devaluation of the dollar make me extremely bullish about the U.S. economy in general,” says Donald Broughton, transportation equity analyst for A.G. Edwards & Sons.
