Congratulations — 2009 is over and you're still here. The consensus among economists and other economic analysts is that the recession is over. In fact, indicators like gross domestic product (GDP) show we hit economic bottom in the second quarter of 2009 and began the climb out of that hole in the last half of the year.
It may not feel like things are getting better, largely because credit has continued to remain tight and unemployment remains at miserable levels. It's hard to recognize good economic news when unemployment is well over 10% and continues to grow, even if new job losses are moderating.
For trucking, the large number of parked trucks and record low equipment utilization rates have also masked the moderate growth rates reported by the Federal Reserve Bank and others. But with growth comes freight, and eventually the need to move that freight by truck.
To put this good news in perspective, the signs of recovery are modest at best. GDP grew just 2.2% in the third quarter of 2009 and will probably be at or under 4% when all the numbers are tallied for the fourth quarter. For this year and next, GDP growth is forecast to remain around 3%, giving us a fairly slow path to recovery, especially considering how far we fell in 2008 and 2009.
While such a gradual recovery may feel less than great, it may actually be a good thing. A number of economists say a slow but steady growth rate will protect us from a rebound or second recession created by too swift or steep recovery.
Beyond the general economic improvement, other good signs for trucking are projections from the Federal Reserve that industrial production growth is headed substantially higher than GDP, hitting 4.1% this year and 4.2% in 2011. One Fed economist has said he believes that number will be even higher, reaching over 5%. The expectation is that industrial production will require trucks to move the goods created, meaning freight to help absorb some of the industry's excess capacity.
Of course, things are never all good. A recovering economy and higher freight levels will bring back trucking's persistent problem with finding enough drivers. As the head of one prominent truckload carrier put it, “When the economy gets better, the driver shortage will come back with a vengeance.”
The recovery is also likely to bring an upswing in bankruptcies among the so-called zombie fleets. These are for-hire carriers that only continue to operate because banks are reluctant to push them into bankruptcy when their only assets — their trucks — have little or no value on the used market. With even the largest truckload carriers now talking about buying used equipment, any uptick in freight is likely to raise the value of these fleets' rolling stock. And that should be enough to encourage their creditors to finally close them down.
However, for those of you who've come through the Great Recession in reasonably sound financial shape and with a solid core of experienced personnel, four or five years of slow, steady growth sounds pretty appealing right now.