Trucking Gives Reason to Hope for Economy Turnaround
Posted on Mon, Jun 14, 2010 @ 01:40 PM
A strong indicator of economic rebound has been reported for the month of May, giving hope to those who may be worried that the stock market's depressing behavior is a sign of a continued recession. Strangely enough, the report comes out of the trucking industry.
The Ceridian-UCLA Pulse of Commerce Index (PCI) jumped 3.1% in May, the largest monthly increase since February 1999. The index tracks credit-card purchases of diesel fuel at truck stops across the United States. and provides a real-time indication of how much freight is moving from ports and factories to consumers. In other words, the higher the PCI, the more products Americans are making and buying.
The jump in the PCI index coordinates nicely with similar increases in manufacturing, shipments, and retail sales, all of which have been rising steadily from mid-2009 lows. The only economic factors that remain stubbornly low are employment and retail inventories. However, even that can be a good sign for the economy, as it may signal that manufacturers and retailers are saving before adding employees and inventory to their overhead.
"The stock market is still dealing with the fear effects of 2008 -- investors are worried it will happen again," says Edward Leamer of UCLA. "This is actual transactions. This is truckers buying fuel."
The PCI is a traditionally jumpy index, falling 0.3% in April after strong increases in December, January and February. The year-over-year growth rate, annualized, was 44%. The strongest increases in fuel sales came in the Midwest, where companies like ADS Logistics have been running hauls across the country, resulting in a 6.1% increase in fuel purchases. Perhaps the most encouraging number however, is the year-over-year growth in the PCI, which has approached 10%, a level Leamer says is necessary to support enough economic growth to decrease unemployment.
The rising truck traffic indicates a GDP growth of 3% to 5% in the 2nd Quarter. Leamer says this by itself is not enough to make a big dent in unemployment, though many companies such as ADS Logistics are actively seeking to hire new truck drivers. Should the PCI hold steady, the U.S. economy should return to its long-term GDP growth trend of 3% by 2013.