Anthony Santomero, president of the Federal Reserve Bank of Philadelphia, said the U.S. economy was actually improving a year ago but began to lose steam last summer and hit a soft spot in the fourth quarter as the threat of war in Iraq increased.
Oil also jumped to over $30 a barrel based in large measure on war fears, forcing diesel fuel prices and other energy costs to increase to record levels. However, now that the war is winding down, oil has dropped below $24 a barrel and diesel fuel prices are falling as well.
Though it is too soon to declare that the U.S. economy is back on track, Santomero thinks economic growth should accelerate over the rest of the year to between 3% and 4% and continue strong into 2004.
"Business spending was beginning to turn around last year until the Iraq situation generated uncertainty," he said. "So the business sector should begin to show improvement now, though it's likely to be gradual."
For the trucking industry in particular, the improving economic landscape is beginning to bear fruit. Prudential senior analyst Andrew Casey said demand for trucking services is slowly recovering with truck tonnage increasing about 7% year-over-year to date.
Also, while insurance prices remain high, fuel prices are now trending down, meaning that cost pressures on truckers should lessen.
