Sunny days ahead for the economy
About a year after freight rates reached historic lows, the immediate future appears bright for trucking and the overall economy.
As part of the Owner-Operator Independent Drivers Association’s spring board meeting on April 30, the chief economist for Kansas City, Mo.-based Commerce Trust provided a glowing forecast for 2021 and beyond.
“From an economic perspective, things look awfully sunny,” Commerce Trust’s Scott Colbert said.
“I have no reason to doubt that we will get at least five to six good years as part of this economic recovery. A typical recovery after a recession lasts seven to eight years. The one after the 2008 recession lasted more than 10 years.”
The assessment is a stark contrast from just a year ago, when the economy stalled as a result of the COVID-19 pandemic. Restaurants and retail stores across the nation were closed for months, and spot truckload rates plummeted well below $2 in April and May 2020. National spot rates for van, flatbed and reefer have increased by more than $1 when comparing this past April with April 2020.
“If you go into a Walmart right now, the shelves aren’t empty, but there are a lot of missing pieces,” Colbert said. “In the short and medium run, you have a tailwind with the highest dollars of freight load. Eventually capacity will catch up with demand, but hopefully you guys can take advantage of that in the meantime.”
Colbert said the overall economy is benefiting from extra money in Americans’ pockets from the stimulus relief bills and historically low interest rates. That combination has created a huge demand in the housing market. Meanwhile, retail sales have surged as well. And as states continue to open up as millions receive vaccinations, the unemployment rates are expected to drop.
One possible negative to note for truckers is that we will likely start to see a gradual shift in the amount spent on goods compared to services.
During the height of the pandemic, the demand for goods increased as there was less opportunity to spend money on events and services.
“Now that we are coming out of the pandemic, people will probably begin to spend a larger percentage of their money on services,” Colbert said.
With that said, the near future appears strong for trucking and the overall economy.
“It’s not going to last forever,” Colbert said. “It never does, but you have some time to make up some ground from what you lost during the pandemic.” LL