Editorial: The Economy Pauses
This Editorial appears in the May 2 print edition of Transport Topics. Click here to subscribe today.
Current performance of the U.S. economy is decidedly unimpressive. Output isn’t plunging, but sluggishness abounds and each sign of growth seems paired with a decline.
Earnings stories scattered throughout this issue paint that picture. Four providers of logistics services enjoyed increases in profits, while four truckload carriers remained profitable, but at lower levels than a year ago.
Wabash National Corp. had a gangbusters start to the year with strong sales and profits to match, but the overall trailer industry is losing a bit of steam as new orders are dropping — although there’s still a hefty backlog of unfulfilled orders, so workers will remain busy for a while.
UPS Inc. grew from January through March but said that was more because of cleverness and the ability to adapt rather than a freight boom. Consumers continue to spend, but business is retrenching. A couple of years ago, the opposite was the case as manufacturing led the economic recovery out of the Great Recession.
UPS said China appears to be stabilizing and that Europe continues to grow, but not uniformly.
Mack Trucks President Dennis Slagle put it into perspective at a press conference, saying that while North American truck sales this year are dipping after a banner 2015, there’s a lot of inventory to drain too. “This is not Brazil,” he said. True enough, and actually important to remember as panic would be premature.
For the year ended March 31, economic growth has averaged nearly 2% annually. That’s not bad, but the trend has been downward to 0.5% in this year’s first quarter from 3.9% during last year’s second quarter.
Most of the discussion we’ve heard lately has been split between the domestic and international economies. Perhaps the best shot in the arm for U.S. truckers and Americans, in general, would be growth abroad.
American manufacturing has been troubled, not because we’re not winning, but because customers abroad have curtailed their orders. Many manufacturing workers have lost jobs over the past 20 years, but many others still have them. Maybe your trucking company supplies those firms with parts or hauls finished goods to ports.
While UPS and rival FedEx Corp. compete fiercely for customers, they are very much united in their commitment to global trade.
Their vision of an innovative, enterprising United States competing strongly on the international stage strikes us as compelling.
