While all can hope that legislation will steer the economy entirely away from the cliff—or at the very least land it on a reversible fiscal slope—tried-and-true economic indicators otherwise suggest the economy will grow at a faster clip this year compared to last.
If not driven over the fiscal cliff or not overly impacted at any point by the ongoing Eurozone financial crisis, the U.S. economy will continue to grow into next year, albeit at a “modest pace,” according to ATA’s Costello and, in step with it, trucking will see “limited growth.”
That’s because he says “some economic fundamentals are looking better,” including most notably housing. “Housing is turning the corner so much so that in the next few years I would not be surprised if we have a housing shortage,” he contends.
“Once the job market improves and pay goes up, demand for housing will rise,” Costello points out. He adds that this is “already happening but at a low level,” which means trucking “will see higher volumes out of housing” this year.
But Costello says while manufacturing was up 5% in 2012, this year total manufacturing is projected to rise only 2.7%; with durable goods climbing 4.7% and non-durable goods going up just 0.8%. “We won’t see the same freight growth from manufacturers” as in 2012, he notes.
Put it all together and Costello expects that GDP “won’t get to 2% growth until the third quarter of next year.” Again, that is not factoring in the negative punch of a fiscal cliff or ramp.
Still, many fleets found it hard enough to secure enough long-haul truckers even in last year’s tepid economy. So, even modest economic growth will add to the challenge of finding and keeping enough qualified drivers this year.
Analyst Chris Brady, president of Commercial Motor Vehicle Consulting (CMVC), regards this year as the tip if not more of the looming iceberg that is the burgeoning driver shortage. “The supply of available drivers will again become acute when freight growth expands enough to require fleets to expand capacity,” he explains.
“The supply of drivers has not reached a crisis level since the Great Recession because fleet capacity has remained relatively stable due to the sluggish-to-moderate freight growth during the recovery,” Brady adds. “But a growing economy will spur fleets to expand capacity and thereby increase demand for drivers. “
The push of a growing, albeit modestly, economy won’t be the only factor heightening the driver shortage this year.