Editorial: Stoking Economic Optimism

There are reasons to be cautiously optimistic that, for the trucking industry, the worst of the current economic downturn may be behind us. For the less optimistic, it appears that at a minimum, things aren’t likely to get much worse before they get better.

While the national economy may not be technically in the throes of a recession — two consecutive quarters of shrinking gross domestic product — trucking, and the manufacturing sector that it relies upon for much of its business, surely has been depressed for some months.

During the latest economic swoon, trucking again proved that it was a bellwether, hitting the dumps in the fall while the rest of the economy continued to surge forward primarily on momentum.

Now as the first signs of improvement appear — from rising retail sales in January and strong job creation even in the face of rising unemployment — we can expect that trucking will be the first to feel the turnaround when it actually begins.

The Federal Reserve’s two half-point cuts in the interest rates last month should begin bearing fruit later this year, although there is disagreement among economists as to just when those improvements are likely to be felt.

Several analysts told Transport Topics last week that things will be better during the second half of the year. And even the most conservative of the analysts said they believe there will be a marked improvement by 2002.

Many expect the Fed to cut interest rates when its members meet again, in March, to make sure the economic pump is primed.

Fed Chairman Alan Greenspan last week told Congress that the downturn might turn out to be as short as it was sharp.

It was the steepness of the decline in the last quarter of 2000 that led the Fed and Greenspan to cut rates so quickly. Now, he said, it appears that things might not turn out to be as bad as feared.

While his comments sent the stock markets down, with concern that the Fed might not lower interest rates again if the economy appears to be in better shape than thought, it sparked optimism that recovery may not be far off.

We in trucking will be among the first to know if Greenspan’s assessment is correct.