While the data behind the monthly Ceridian-UCLA Pulse of Commerce Index (PCI) still doesn’t indicate a “double dip” recession is drawing near, it clearly indicates that the U.S. economy is going to stay sluggish for some time, with subpar gross domestic product (GDP) definitely affecting freight volumes.
He said the PCI fell 1.4% in August on a seasonally and workday adjusted basis, which follows a 0.2% decline in July.
“July and August results indicate that the PCI will decline in the third quarter, suggesting GDP growth of zero to 1%,” Leamer pointed out. Instead of viewing the current period as a recession, he said it is best to consider this a period as slow growth, stumbling forward, waiting to get the energy to run again, but not falling down.
The PCI is based on real-time diesel fuel consumption by over-the-road trucking operations in the U.S. Data collected by Ceridian is analyzed by economists at UCLA Anderson School of Management and Charles River Associates.
While diesel fuel volumes were flat from June 1 to July 23, they fell 2% between July 23 and Aug. 19, which is a rate of decline that is only slightly less than during the recession of 2008.
“And remember bad weather, such as a hurricane, within a given month doesn’t ‘skew’ the data much, as trucking firms fuel up ahead of major storms, knowing they won’t be able to during such events,” Leamer said.
He also stressed that the PCI data indicates that there is a “different dynamic” to the U.S. economy today, compared to that of the 1960s, 1970s, and 1980s.
“One of those key indicators is that manufacturing jobs are not going to come back,” Leamer explained. “As a result, what we’re experiencing is the ‘new normal,’ where the U.S. economy will continue to stumble forward until a new growth engine is identified.”
He also noted that, on a year-over-year (YOY) basis, the PCI increased 0.4% in August. However, while the YOY growth trend continues – the PCI has grown on a YOY basis every month since January 2010 except for May 2011, Leamer emphasized – this is down from the 1% YOY increase in July.
“Over the past four months, the YOY increase of the PCI has fallen below 1% compared to 3% plus [YOY growth] in the first four months of the year – further indicating the weakness in the economy,” he said.
The sluggish performance of the U.S. economy is in part a reflection of what’s occurring around the globe as well, with one indication being the mixed performance of commodities in August as market participants grew increasingly concerned about the extent of the global growth slowdown, noted Nelson Louie, global head of commodities in Credit Suisse’s Asset Management division.
“Commodities demonstrated mixed performance in August as weaker macroeconomic data and uncertainty surrounding the state of the global economy continued to impact markets,” he explained in a research brief. “Falling consumer confidence, poor non-farm payroll figures, and other weak leading economic indicators are increasing recessionary fears.”