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ACT: New COVID-19 cases threaten recovery, create ‘choppy’ path forward

July 30, 2020
The tug of war between positive and negative influences on the business environment and trucking reached a pivotal juncture at the end of June, but escalation in new COVID-19 cases threatens to abort this nascent recovery, according to ACT Research.

The impact of more people and politicians taking the threat of COVID-19 more seriously is a choppy economic path forward, according to ACT Research’s latest Commercial Vehicle Dealer Digest report.

The monthly report includes a high-level forecast summary, complete with transportation insights for use by commercial vehicle dealer executives, reviewing top-level considerations such as for-hire indices, freight, heavy and medium duty segments, the total U.S. trailer market, used truck sales information, and a review of the U.S. macro economy.

“As the virus flared in the weeks following Memorial Day, and exacerbated by the Fourth of July, segments of the economy will be turned off and back on as the authorities work to contain the widening spread of the disease,” said Kenny Vieth, ACT’s president and senior analyst. “While we do not believe state-level closures are likely from here, we note that the raging case counts in major Sunbelt states raise the risk of major supply-chain disruptions, if any of those states are shuttered for several weeks.”

In addition, ACT Research recently released its latest monthly Transportation Digest report, which claims that the tug of war between positive and negative influences on the business environment and trucking reached a pivotal juncture at the end of June, but escalation in new COVID-19 cases since mid-June threatens to abort this nascent recovery.

“The sudden shock of the COVID-19 recession pushed the market off the edge of the cliff in March and April, but almost as swift and sharp was the rebound in the economy and in freight in May and June,” Vieth noted. “Recognizing that we are at a fork in the road, our guess is the positive momentum of the last two months can be sustained, but that depends on the ongoing trajectory of the contagion curve, future policy responses, changes impacting key goods-producing and distribution industry activities, and international economics, just to name a few.”

“Economic reports released in early June depicted an economy that was recovering at a seemingly stronger-than-expected pace, encouraging an air of optimism regarding the advancing pace of activity,” Vieth added. “Unfortunately, toward the end of June, a resurgence of COVID-19 across many states raised the specter of renewed closings and possible acceleration of layoffs, highlighting the uncertainty that still clouds the business outlook.”

In recognition of the virus’ impact, ACT Research has created a COVID-19 Market Watch webpage to track noteworthy high frequency macroeconomic and transportation-specific market indicators.

However, Vieth noted that the pandemic isn’t the only point of concern, despite its top billing.

“The U.S. energy sector remains vulnerable, increased trade tensions with China are another consideration, as well as the restructuring of the retail sector, and from there we can’t forget potential issues surrounding commercial real estate as well as general credit market conditions that may pose risks just over the horizon,” he said.

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