Real gross domestic product (GDP), a comprehensive measure of the economy, grew at a revised annual rate of 3.9% during the first quarter, according to a report U.S. Bureau of Economic Analysis (BEA) released today. The final figure was revised downward from BEA’s preliminary estimate of 4.4%.
Personal consumption expenditures increased at a 3.8% annual rate, which fueled the economy as consumers spent more on nondurable goods (food, clothing, gas) and services (medical care, housing), which grew 6.9% and 3.9%, respectively.
“Growth in personal expenditures means more freight has to be moved from distributors to stores,” said Steve Latin-Kasper, NTEA market data and research director. “That means there’s more tractors-trailers on the road, which creates the need for more drivers.”
A separate report published by, Bear, Stearns & Co., an investment firm, showed that Class 8 truck sales in May dropped 3.8% from the second-highest net new order total on record in April. Backlogs on Class 8 orders are continuing to mount, indicating that carriers are investing in equipment.
According to the BEA report, businesses boosted spending, as gross private domestic investment posted a 9.4% jump in annual rate. Of that category, equipment and software had the biggest boost, up 9.2%. This implies the manufacturing sector is strong. “When capital spending goes down, manufacturing gets kicked in the butt,” Latin-Kasper said.
But that’s hardly the case. The rise in consumer spending has encouraged businesses to invest more in equipment and in workers. “During the recent recession consumers were buying less, businesses were not investing, and workers were getting laid off— it’s a vicious cycle. But that’s going away—we’re at our third consecutive quarter of growth, and the economy is booming,” noted Latin-Kasper.
Although GDP is a broad measure of the economy, the sustained health of the trucking industry can be inferred from the data. “Much of trucking relies on the health of the macro-economy; GDP is about as macro as you can get,” said Latin-Kasper
Latin-Kasper pointed to growth in the world economy as a factor that will ensure the continued health of the GPD. “What’s going to make this sustainable is the fact that it’s stable and it’s global— it’s not just the U.S.,” he said pointing to the recent recession as an example. “The last recession in terms of the whole economy wasn’t bad at all, but for the manufacturing sector, it was terrible— part of that was exacerbated by the global situation as our European trading partners were in a slump.”
Exports have increased at an annual rate of 7.5%, and imports are increasing 10.4%. Imports are a subtraction in the calculation of GDP.
The government has increased overall spending at an annual rate of 3%, driven by a 13.2% increase in the national defense budget.