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Economists predict the United States economy broadly and the trucking economy specifically are poised for a rocket-like recovery in the second half of 2021, propelled by $1.9 trillion in federal stimulus and millions of Americans who will receive COVID-19 vaccinations and return to restaurants, ballparks and theaters.
“If you’re looking to find a pessimistic economist, I’m not the guy,” American Trucking Associations Chief Economist Bob Costello told Transport Topics. Costello increased his prediction for the nation’s gross domestic product growth this year to 7%, up from 5% just a few weeks ago. “We are going to have some insane growth rates for GDP,” he said.
Adding to this optimism is a recent analysis from BMO Capital Markets that indicates American households have saved a whopping $1.7 trillion in 2020 and early 2021.
To put that into perspective, Costello said if consumers spend that extra cash, it would be enough to power three years of normal consumer spending — which averages more than $500 billion a year.
“There is so much pent-up exhaustion from the pandemic, and we are ready to have some fun,” Costello said. “That’s money that is going to start burning a hole in a lot of people’s pockets. People are going to spend a lot of that money.”
In the trucking industry, Costello believes all sectors — including those that experienced a downturn during the pandemic, such as tanker fleets — will see a jump in business.
“I think the parts of trucking that have been strong will remain strong,” he said. “And the weak parts of trucking will get strong. It’s going to be good for pretty much everybody.”
Costello said the biggest challenge fleets face is finding enough drivers to move the freight. Before the pandemic, he said the industry was short at least 60,000 drivers. That number has likely grown during the pandemic, as veteran drivers have retired while the pace of new entrants has slowed amid closures and service disruptions for state departments of transportation and driving schools. Plus, many thousands have been disqualified and taken off the road as a result of the Federal Motor Carrier Safety Administration’s Drug and Alcohol Clearinghouse database.
Economist Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, told TT he expects it will be another year before the economy returns to pre-pandemic levels. He predicts consumer spending money from stimulus checks and their pent-up savings will lift the economy, but believes expansion of COVID-19 vaccine distribution is key to a full, sustainable recovery.
“Once we get to see the actual evidence that [the vaccine] is effective in a real-life setting — and enough people have gotten the shots — by January and February you’ll see people at events where we are interacting with strangers, and we’ll be comfortable being in a room with hundreds of other people in a business meeting,” he said. “Until then, everyone is going to be a bit hesitant.”
Dhawan added, however, that the population is ready
“We know the American consumer loves to spend, and they will in the second quarter,” he said. Dhawan is forecasting GDP growth of around 8% for the second quarter, lifted by stimulus and savings spending, then slowing to 3% during the third quarter. He predicts 2022 will see sustained growth near 5%.
University of Minnesota-Morris professor and economist Stephen Burks is generally optimistic about the overall U.S. economy, especially later in 2021. He expects GDP growth for Q3 in the 6% to 7% range, but worries that the spread of variant strains of the COVID-19 virus could slow economic activity just as the recovery gets under way.
“There is still some significant chance we will get a third wave of heavy infections because of variants that can, to some degree, dodge existing immunity,” Burks said. “If that happens, we will have more clampdowns, and it’s not sure how large or long they will be, but it will dampen the expansion.”
Professor Dale Rogers at Arizona State University told TT economic recovery will challenge an already tight trucking capacity market. The monthly Logistics Managers Index that he and other economists compile is at its highest level in more than five years. “Trucking is crazy busy,” he said. “It’s just amazing how transportation pricing is way up, and capacity is way down. The trucking economy is pretty hot, demand is up, and prices are up.”
Rogers added, “Regarding the overall economy, I think it will be summer before things really get crazy. The stimulus money is going to be a big thing. There’s going to be a lot of pent-up demand.”
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