Holding out for some economic hope

For a while there, it “sort of” felt like the economic recovery we had all told ourselves was happening was in fact, you know, really, happening. But as it turns out, we may have gotten a bit ahead of ourselves with that thought.

Why? Well, for starters the first two advance estimates for first quarter GDP growth were both weak, make that very weak at 0.2 percent for the first one and then -0.7 percent for the second one.

There are many reasons for that sluggish GDP figure, including another very difficult winter, which subsequently quelled consumer spending activity, as well as the West Coast port labor situation, that (as previously reported in this space) curtailed real exports of goods and services, which dropped 7.2 percent in the quarter, compared to a fourth quarter gain of 4.5 percent, while real imports of goods and services headed up 1.8 percent in the first quarter, whereas they jumped 10.4 percent in the fourth quarter (and likely was a byproduct of the holidays).

Then there was the low fuel factor, which many economists posited would translate into a higher, and most definitely needed, rate of consumer spending, but that ended up not happening, as that savings at the pump went in many cases to people paying down debt, not a bad move at all, but also not what was hoped for in terms of giving the economy a needed kick start either.

In trying to veer off the “woe is the economy” theme, there are clearly things to be encouraged about here, too.

One thing is increasing employment levels, which, while not entirely ideal given the number of jobs being added that are seasonal or part-time (as well as those that have given up and permanently left the work force), are in much better place than even just last July’s unemployment rate of 6.2 percent to 4.5 percent this past April.

And with more jobs comes increased consumer spending, at least in theory. As we know, retail sales remain flattish, or stagnant, for the most part. There is a hope that with warmer weather here (outside of the Northeast, of course), that would lead to more consumer spending.

While consumer confidence is embraced by some and held in disdain by others, it is an economic indicator all the same. The Consumer Confidence Index issued by the Conference Board last week showed moderate growth from April to May, following a steep April drop off. Given that this index is based on how consumers “feel” about the economy at a certain time, it stands to reason it is a less than perfect benchmark, but it is still one that bears watching.

On the freight transportation front, there has always been a working theory that what carriers are doing serves as a leading economic indicator. For several years, that theory largely held true, it seems, but in recent years, some people maintain that sentiment that theory may not carry the weight it once did.

While manufacturing and industrial production data, during given times of the economic downturn and still today, has been largely positive at times, it has seldom clearly dovetailed into improved transportation volumes.

Perhaps that is a blessing in a sense, given the service issues that have hindered rail carload and intermodal networks (that are getting better) and a truckload sector still impacted by tight capacity (but not as bad as it was a year ago) and onerous federal government regulations. But it would be interesting to see what might happen were the economy truly to kick into high gear (say a 3-to-3.5 percent or higher GDP for several quarters), too. After all a booming economy that would stretch transportation networks really would be a good problem to have, as it clearly outweighs the alternative that we have seen en masse for far too long anyhow.