Subscribe to our free, weekly email newsletter!



Economic malaise continues

By Jeff Berman, Group News Editor
July 27, 2012

June retail sales and the ISM Manufacturing Report on Business—two pretty decent economic indicators—both put up their lowest numbers from 2009. Not good. Consumer Confidence in July fell to its lowest number in 2012 year-to-date. Again, not good. The advance estimate of second quarter GDP from the Department of Commerce checked in at 1.5 percent. This is especially really not good.

See where I am going here?

Oh, yeah, UPS also lowered its 2012 guidance for the rest of the year, due to what its CEO Scott Davis call a “looming fiscal cliff.”

I wish I was making this stuff up, but, once again, the economy is top of mind and not in a positive way either. But it is what we are up against and really have been up against for literally years now. Seriously, when was the last time any of us were feeling really “jazzed” about the economy? It feels like a long, long time at this point.

Looking at GDP data, it is pretty clear what is happening. Consumers are uneasy about making non-essential purchases—and with good reason.

According to Commerce, personal consumption expenditures (PCE) were front and center for the deceleration in real GDP from the first quarter to the second quarter. And it added that the price index for gross domestic purchases, which measures prices paid by U.S. residents, was up 0.7 percent from the first quarter to the second quarter.

Other contributors to the decline included an acceleration in imports, decelerations in residential fixed investment, a smaller decrease in federal government spending and an acceleration in imports.

Long story short, the economy is stuck in neutral and we all know it. While many freight transportation companies have posted solid numbers, one needs to know (and I am sure you do) that this is far more of a reflection of pricing power and accessorial charges than meaningful annual gains in volumes, which are largely flat in most cases regardless of mode.

I know it is getting old saying this, but things on the economic front—aside from GDP, that is—like jobs numbers and housing, for example, are still not where they need to be to serve as a signal that the fog of economic malaise has lifted. It won’t happen today and probably not tomorrow either. But one day it will and that will be when the healing of recent years will truly begin.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Earlier this week, FedEx said it is expanding its International First service for early deliveries with the addition of 31 new origin countries, which will bring the total number of origin markets for the service to 97.

Monday, December 22 is pegged as UPS's peak delivery day, as the company expects to deliver more than 34 million packages that day, adding that it expects to see six days in December top last year’s peak shipment day delivery record of 31 million packages.

The time has come again for less-than-truckload (LTL) general rate increases (GRI), with various carriers recently announced their respective rate hikes in recent days.

Article Topics

Blogs · Department of Commerce · GDP · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA