May 08, 2014
Are things what they seem when we look at how the economy currently stands? Given what we have seen and experienced in recent years, it remains as valid a question as ever, it seems.
Why? Well, for one thing there are a fair amount of metrics that seem to suggest this recovery is different than others in that, unlike in past years, there seems to be more potential that the common ailment of the “second half swoon” may not occur as it has so often in recent years.
The swoon has typically happened after some warranted and some overhyped data become all encompassing and try to stress the point that this year will be different than last year and the one before that and the one before that and….well, you get it.
Before anyone gets too excited about what the current trend lines might suggest, let’s keep in mind that the first quarter preliminary estimate from the United States Department of Commerce barely pushed the needle at 0.1. But it also bears repeating that one of the worst winters in recorded history played a role in that paltry number, too.
While GDP was down, the unemployment rate dropped to 6.3 percent, which is a respectable figure to be sure, especially considering where it was not all that long ago. But that drop in unemployment comes with the caveat that the number of people in the labor force dropped by 860,000. Even so, it is still more of a positive than a negative when assessing where things currently stand.
Other mainstream economic metrics provide some cause for optimism, too, with retail sales showing steady, but well short of spectacular growth, and U.S. consumer confidence is approaching pre-recession levels, according to recent data from the The Nielsen Global Consumer Confidence Index cited in a Reuters report. This index made the case for better times ahead for the U.S. economy based on the following points: an increase in consumers putting more money into savings accounts; a decline in unemployment numbers, and increasing equity and home prices, among others.
Nielsen noted that continued consumer confidence will be contingent on further gains in the labor and housing markets along with sound economic policy.
To be sure, what is happening on the mainstream economy front has a direct correlation to the freight economy front, although there have been times in recent years where one could make the case there have been disconnects here and there.
In the most recent edition of the Cass Freight Index Report, Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report observed that despite the tough winter and minimal Q1 GDP number freight volumes are set to expand, couple with strong, yet moderating, freight volume.
“Growth in employment and manufacturing in some key sectors such as construction and motor vehicles is an indicator that the economy is strengthening,” Wilson wrote. “The fast-paced expansion from the first quarter should settle into moderate growth in the second quarter.”
Those are some encouraging thoughts to chew on from one who knows her stuff more than most. While things are far from perfect, it will be interesting to see how things shake out as we approach the second half and beyond. Will we see yet another economic “head fake” or will see the semblance of truly steady and secular growth? It is still too early to tell but at least there are more positive signs than we have seen at this time in past years.
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