Trucking suggests transport slowing, but has not rolled over
Trucking suggests transport slowing, but has not rolled over
I have been paying particular attention to the monthly report of the American Trucking Association, to compare its performance with rail, which has been sagging since the beginning of this year. A few other people are relying on the Cass Freight Index, but since that includes international shipping and air transport, it does not exclusively measure the US economy.
In April this index rose 7.7%, and was up 7.4% YoY as well. In May it gave almost all of that back:
According to the ATA, truck traffic declined 6.1% in May, and is now up only 0.9% YoY.
The trend remains neutral to slightly positive, in contrast to rail, suggesting that overall the economy, at least as measured by transport, has slowed down substantially but not yet rolled over.
Trucking is domestic. The World Trade Organization’s forecast for global trade growth is a bit gloomy as well:
https://www.wto.org/english/news_e/pres19_e/pr837_e.htm
‘World trade will continue to face strong headwinds in 2019 and 2020 after growing more slowly than expected in 2018 due to rising trade tensions and increased economic uncertainty. WTO economists expect merchandise trade volume growth to fall to 2.6% in 2019 — down from 3.0% in 2018. Trade growth could then rebound to 3.0% in 2020; however, this is dependent on an easing of trade tensions.’
The FED is likely to lower interest rates next month in part out of concern for the damage being caused by Trump’s trade war.
Almost the entire economic-financial community is drawn to the recession scenario. It is what we are familiar with.
But maybe,just maybe the type of scenario we should be thinking about is some form of great stagnation scenario. In a way this may be the worse case scenario. For the most part recessions contain the seeds of their own ending and are self correcting. But we really have no idea how to get out of a great stagnation.