With economic growth moving from business investment to consumer spending quotthat has big implications for freightquot said FTR39s Bill Witte Photo by Sean KilcarrFleet Owner

FTR: U.S. economy in precarious balance

Sept. 14, 2016
Consumer spending alone is what’s sustaining U.S. economic growth at the moment.

INDIANAPOLIS. The U.S. economy is a chair that is balancing on only one of four legs, in the words of FTR economic expert Bill Witte, and that “one leg” is household consumer spending.

"It's a big leg, household consumption; but if you chop it away, the chair falls over," he emphasized in a presentation here during the annual transportation conference hosted by research firm FTR, as business investment and exports are down while government spending is “lackluster” at best.

“Consumption I think is a little too exuberant,” Witte stressed, adding that there are “several things to watch” in terms of the “one leg” now propping up the U.S. economy becoming unstable.

“If real income growth slows down, we’re in trouble,” he explained. “If consumer sentiment falls or if consumers stop buying cars – we’re on track to sell 17 million [light vehicle] units this year – that’s another bad sign.”

Yet Witte also noted that there are “basic problems” trying to make predictions about the U.S. economy right now as there are a lot of things going on that are “not typical” of previous economic cycles.

“Labor productivity growth is terrible; there’s been a decline in the overall labor participation rate; there’s weakness in business investment; housing starts are good but they are not where they should be,” he said. “The stock market is also high by historical standards. So thee lots of reasons to be very caution here.”

At this moment, Witte is projecting a little over 2% gross domestic product (GDP) growth for the U.S. to occur from the third quarter of this year through the end of 2017: in his words the continuation of the current “status quo” economic recovery and expansion.

“My best guess is that we’re going to chug along at 2% unless something happens,” he added.

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

The Future of Mirrors is Closer Than it Appears

Why Mirror Camera Systems are the next step for fleet safety and exoneration While many commercial trucking cameras are similarly marketed, they are not all created equally. The...

The 20:1 Solution: Unlocking the ROI of a Modern Asset Maintenance Solution

Discover how modern fleet maintenance software can drive step-change improvements in shop efficiency, cost control and vehicle productivity, along with how to calculate the ROI...

Digital and AI Solutions for Rideshare Safety

Anyline’s study, “How Digital AI Solutions Can Enhance Rideshare Safety,” reveals rideshare drivers are overly confident in their tire knowledge, risking passenger safety. Download...

Introducing the World’s First Mobile Tire Tread Scanner

Anyline’s innovation allows accurate tire tread measurement via any mobile device, ensuring legal compliance for fleets. Read more and find out how you can cut operating costs...