Supply Chain Blog
The Labor Day holiday upon us, kids are back in school, vacations are over, and businesses are focus on a strong finish in the third quarter.
Worries about China, tariffs, politics, hurricane Dorian, a volatile stock market and the economy abound. Fortunately, despite these worries, consumers still have confidence in this economy.
A survey of consumer confidence index fell slightly to 135.1 in August from a revised 135.8 in July, according to the Conference Board. The index remains close to a 19-year high. The post 2008 recession peak was 137.9, set last October.
There is little chance of a recession with consumers spending (July retail up 0.7 percent in July) and confidence. It bodes well for the freight markets as we head into the holiday season.
While manufacturing slows and Wall Street frets over the inversion of bond prices, shoppers continue to boost the American economy.
The labor market remains our economy’s main source of strength. Employers have continued to add jobs, unemployment was 3.7 percent in July and wages are growing. All bode well for continued spending by American consumers.
The Labor Department says, that the cost of labor has continued to rise, a plus for workers’ paychecks. Unit labor costs grew at a 2.4 percent rate in the second quarter.
Meanwhile, truckers’ costs are rising, putting stress on carriers potentially leading to bankruptcy as freight pricing remains low.
Let’s look at the numbers.
July is in the rear-view mirror and the economy seems to be flowing as consumers spend and manufacturing treads water. The freight market also seems to be perking up.
A combination of lost capacity due to carrier bankruptcies and higher tender volume from shippers, I would expect to see spot rates begin to creep up over the next few months.
Despite what the public is hearing from the 25 candidates for President, the economy still enjoys low employment, rising wages and GDP growth. Let’s look at the numbers.
The U.S. consumer is keeping the economy moving forward as retail purchases rose 0.4 percent in June. Production at manufacturers also rose 0.4 percent beating expectations.
While consumer spending represents about 80 percent of our nations GDP, business spending and manufacturing remain the soft spot due to tepid global demand and trade policy concerns.
On the freight side of the economy the future remains cloudy as ACT Research showed two quarters of negative growth and DAT reports a 50 percent decline in spot freight moving through their marketplace. This economic contraction in the freight market is across all modes. Smaller motor carriers are starting to drop out of the market which should ease some of the overcapacity challenges.
Let’s look at the numbers.
As I write this, Independence Day is tomorrow. The day for us to relax with family, friends and be thankful for the many freedoms we enjoy as a nation. I wish you all a happy and safe holiday weekend!
The economy seems to be slowing down a bit as manufacturing, housing, and exports are trending lower. While manufacturing is still in positive expansion territory it isn’t growing. I suspect the trade war is the culprit as uncertainty drives investment decisions the wrong way. Additionally, there are more than twenty candidates for president speaking about how bad the economy is at a time when the numbers contradict these claims.
In my view, this has a negative effect on consumer psyche. So far this year its been consumer spending that has kept our economy moving forward. Let’s hope that this doesn’t change.
The truth is that while the economy is good, it is not as good as 2018. Let’s look at some numbers.