PHILADELPHIA — The flawed and imperfect U.S. economy is, and will remain well into 2016, the world’s strongest producer — and trucking will benefit from that, two economists offering forecasts said here.
The nation needs to work off a temporary bloating of inventories but then will resume an underlying growth pattern of 2.5% per year or more, they say. Trucking will benefit from a stronger housing market, the economists said Oct. 18 at the Management Conference & Exhibition of American Trucking Associations.
Two chief economists, Bob Costello of ATA and Nariman Bahravesh of IHS Inc., offered analysis and forecasts at MCE.
In a quick tour around the world, Behravesh said China’s official growth rate of 7% a year is quite probably overstated, Brazil is suffering through a normal recession and Russia has that plus self-inflicted troubles from a war and sanctions. India, he said, now is growing more rapidly than China.
Behravesh said China, plagued by a rapid expansion in debt, could become like Japan, an economy that did not collapse but one that has been stagnant for many years.
As for the United States, he said, it is close to full employment and the risk of inflation is low. The domestic economy is doing well but exports are a problem, Behravesh said, because the U.S. dollar is strong, meaning it is hard for manufacturers to export their goods.
Costello said inventory increases, which decrease the demand for new goods, have their root in trucking.
“I’ve talked to shippers, and the capacity constraints we saw in 2014 were like nothing we’ve ever seen before,” he said. Therefore, shippers decided to increase inventory levels, but the economy “took a breather.”
Costello said the glut of products on shelves is not so large as to cause great worry.
“The U.S. economy is on solid footing,” he said. “When this inventory adjustment is done, there will be a high volume of freight,” Costello said.
The demand for trucking services should boost both the truckload and less-than-truckload sectors, he said. Earlier this decade, the tank truck group enjoyed the greatest demand but now that spot has moved to refrigerated carriers, Costello said.
Behravesh said the nation will enjoy “decent growth but not gangbusters.”