GDP number seems about right
May 31, 2012
Earlier today, the United States Department of Commerce’s Bureau of Economic Analysis released its second estimate for first quarter real gross domestic product (GDP), which checked in at 1.9 percent.
This is short of the fourth quarter’s 3.0 percent and also short of the advance estimate for the first quarter, which was 2.2 percent.
It is fair to say we want better numbers, especially at a time when the word “recovery” is nearly as cumbersome as the word “recession” was during the bleak times we all experienced not all that long ago.
But the numbers are what they are, and I think they are not entirely surprising. As we all know what happens in the freight economy serves as a terrific barometer of economic activity. And that is what helps to put the less than impressive GDP number into better perspective, it seems.
Consider that trucking and rail volumes are largely flat, coupled with talk of a “significant” recovery underway quelling to a large degree, while ocean capacity remains abundant and air cargo volumes relatively anemic, and today’s number makes even more sense.
Commerce noted that the nearly 2 percent GDP gain reflected positive contributions from personal consumption expenditures, exports, residential fixed investment, private inventory investment, and nonresidential fixed investment and was off set by negative contributions from federal government spending and state and local government spending, with imports—which are a subtraction in the calculation of GDP—increased.
A closer look at the numbers tells us that real personal consumption expenditures rose 2.7 percent, compared to 2.1 percent in the fourth quarter. That could very well be the silver lining in all of this, as it shows that consumers are slowly coming out of hiding and spending some money that has largely been on the sidelines.
And with consumer spending representing roughly two-thirds of all economic activity that is a good thing for carriers and 3PLs.
Another encouraging data point is that real exports of goods and services were up 7.2 percent in the first quarter compared to 2.7 percent in the fourth quarter, with real imports of goods and services moving up 6.1 percent compared to the fourth quarter’s 3.7 percent.
Even though the overall GDP number is not where we would like it to be, considering that pre-recession GDP numbers were typically more than double, if not triple, what we are seeing today, any growth at all is better than none. This goes without saying, of course. But let’s hope that we see higher GDP growth numbers in the coming quarters. We are on the right track, but we have much more to do.
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