By Randy Grider
A panel of economists painted a bleak outlook for the near future Monday, Oct. 22, at the American Truck Associations’ annual Management Conference and Exhibition in Orlando, Fla. Driven by a slumping housing market, a rebound in trucking will take longer than previous forecasts, the experts said.
ATA Chief Economist Bob Costello said freight tonnage, down 2.2 percent from last year, is in a “recession environment,” and that overall loads are flat. Costello said that while there are other factors keeping freight soft, “the housing market is the No. 1 reason tonnage is down.”
Nigel Gault, Global Insights’ group managing director for North American Macroeconomic Service, said because of housing woes and a tighter credit market, the U.S. economy will slow to 1.5 percent growth for the rest of the year and less than 1.5 percent growth during the first months of 2008. Customer spending is expected to slow during the holiday season, said Gault, who called the housing slump a “downturn of historic proportions.”
“There is a bloated supply of houses – in the area of eight to 10 months supply on the market,” he said. “I see the housing market to continue downward, bottoming out in the first half of 2008. It still has a long way to fall.”
Gault said he expects the Federal Reserve to cut interest rates as many as two more times before the end of the year. “Still, I place the odds of a recession at about 30 percent,” Gault said. “What helps is a strong global economy.” National Association of Manufacturers Chief Economist David Heuthers said one result of a weak U.S. dollar has been a positive for the U.S. export market.
Searching for other positives, Costello said the driver shortage has eased, and while his trucking rebound has been postponed to the second half of 2008, he said that “When things turn around, it will be very quick.”
The panel was moderated by FoxNews Business Correspondent Stuart Varney.