The U.S. economy grew at an annual rate of 3% over the second quarter, according to an advance estimate released by the Bureau of Economic Analysis today. This growth is a deceleration from the 4.5% boost over the first quarter, and was driven by a decline in personal consumption expenditures.
Consumers moderated their spending, indicated by personal consumption expenditure growth decelerating to an annual rate of 1.0%, from last quarter’s robust 4.1%.
However, there is evidence of job and wage growth as personal income increased 6.5% to $149.4 billion. Disposable personal income, or personal income less taxes, increased 2.9% to $129.5 billion. Disposable personal income increased 3.2% in the first quarter.
Inventories are shrinking, with nonfarm private inventories posting a 1.9% drop.
Businesses continued to make sizable investments in equipment and software, as spending jumped 10% over the previous quarter, an increase over the first quarter’s 8% increase.
According to Chris Brady, president of Commercial Motor Vehicle Consulting, these indicators point to sustained growth in trucking. With inventories shrinking despite a continued growth in disposable personal income and personal consumption expenditures, retailers are under more pressure than ever to meet the demands of consumers, Brady said.
“Although there was a slowdown in consumer spending, I don’t expect to see a decline because personal income is growing,” Brady said. “There’s no pullback in consumer spending— it’s going to accelerate moderately from the second-quarter growth rate.”
“When consumer spending increases, it’s going to pull on the supply chain,” Brady explained. “In the first half stocks decreased— that’s good for freight because wholesalers and resellers will reorder goods to satisfy sales volumes and replenish stocks.”
However Brady did note that a leveling of consumer spending would level the growth of the economy. Overall, in terms of the economy, there are some signs of slowing, but in terms of freight, there remains underlying strength in the trucking industry. “Business investment remain strong and exports accelerated—the drag on the economy was the deceleration in consumer spending,” Brady said.