“There’s a growing likelihood there will be no recession over the next 12 months, with economic growth continuing for the rest of 2011 and possibly into 2012 as well.” –Robert Dieli, president and founder of RDLB, Inc., an economic research and management consulting firm specializing in economic forecasting and analysis.
Good things come to those who wait, or so the saying goes, and despite the slow pace of the U.S. economic recovery, truckers should look forward to a continued run of good times. At least, that’s what the forecasts are saying at this particular moment in time.
For example, the Institute for Supply Management (ISM) recently released an updated – and very upbeat – outlook for the U.S. manufacturing and non-manufacturing sectors this week. The group projected that U.S. economic growth will continue throughout 2011 at a pretty healthy pace and offered some robust figures as well.
In the manufacturing sector, revenue is expected to increase 7.5%, capital investment should rise 17.9%, and capacity utilization will expand to 83.2%. Non-manufacturing business growth is also expected to continue in 2011, with revenue expected to increase 2.1%, capital investment to grow by 1.4%, and capacity utilization to expand out to 83.7%.
“Indications are that non-manufacturing will continue on the path of slow and sustainable growth for the balance of 2011,” added Anthony Nieves, chairman of the ISM’s Non-Manufacturing Business Survey Committee. “Price increases and slow employment growth, however, are prominent areas of concern in the non-manufacturing sector.”
In a conference call with reporters hosted this week by H. Peter Nesvold, managing director of equity research for Wall Street firm Jeffries & Co., Stu MacKay, president of market research firm MacKay & Company, added that the economic picture looks especially good for truckers for the rest of the year, in terms of freight volumes remaining at a robust level.
According to MacKay and Robert Dieli, president and founder of RDLB, Inc., an economic research and management consulting firm, growth in “truckable economic activity” or “TEA” this year is expected to be 6% to 7% up over 2010 – and it may stay high into 2012 as well, based on the strength of the U.S. manufacturing sector.
Steve Latin-Kasper, director of market data and research for the National Truck Equipment Association (NTEA), is also pretty confident that the U.S. economy is strong and getting stronger.
“Real [economic] demand is coming back, orders are picking up all over, and we’re seeing a huge increase in trade,” he said during a presentation last week at PHH FirstFleet’s 2011 Truck Conference.
“And as long as the Fed [the Federal Reserve] keeps its fund rate as low as it is – which is near zero – we’ll be looking at low interest rates for some time. Some going forward from here to 2014, things look pretty good,” he added.
Low inflation – expect for food and energy – and increasing trade, especially in terms of exports from the U.S. are the high points of what he sees occurring in the years ahead. Yet obviously, it’s not going to be all “peaches and cream” from here on out – and Latin-Kasper is the first one to note that.
For example, he believes we’ll experience higher base unemployment levels in the U.S. from here on out compared to the late 1990s and early part of the 21st century, with unemployment expect to hang in the high 7% range into 2012 and not dropping down to 6% in 2013-2014. Furthermore, he notes that 6% unemployment is likely to become the “new normal” in terms of what’s considered the “full employment” level in the U.S.
He also doesn’t expect the U.S. housing market – a major driver of truck freight, by the way – to fully recover until the second half of 2012. Latin-Kasper also noted that budget deficits at the state and federal government level are going to create “drag” of the overall economy.
Still, all that considered, Latin-Kasper is confident that the U.S. is in for what he calls “a long period of growth” though he stressed the pace of economic growth – be it fast or slow – has yet to be determined.
Not a bad forecast, to say the least – and, should it come to pass, it’ll generate a lot of freight upon which trucking can feast.