Heavy Duty Trucking, January 2018

HDT JANUARY 2018 22 WWW TRUCKINGINFO COM Hotline TRUCKINGS MOST RESPECTED BUSINESS REPORT Watch ECONOMIC Will we avoid the first quarter GDP blues While final economic numbers for 2017 have yet to roll in economic growth was strong Will it keep moving higher into the New Year The broadest measure of the economy the nations gross domestic product grew at an annual rate of 33 in the third quarter according to a Commerce Department estimate released in late November A revised estimate was some two weeks away at press time That followed 31 annualized GDP growth in the second quarter marking the first time this total measure of the output of goods and services increased 3 or more for two straight quarters since 2014 Many economists predict things will remain strong once fourth quarter and full year 2017 numbers are reported with projected improvements of around 27 and 22 respectively That would still be far off the pace of the halcyon days before the Great Recession but par for the course since the end of the financial crisis But can the economy ever do better Perhaps The problem continues to be that pesky first quarter of the year In 2017 first quarter GDP growth was 12 In the first quarter of 2016 it was just 06 And in the first quarter of 2014 it dropped at a near 1 annual rate In all three cases it was the lowest GDP reading of the year unless the final quarter of 2017 becomes a total surprise In contrast in 2015 the first quarter had the best GDP performance of the years four quarters And in 2012 and 2013 the first quarter performed near or at the top for each of those years The point is that the first quarter of the year is a volatile time From snowstorms that paralyze freight movements and keep consumers out of stores to labor disruptions and other factors the first three months of the year can be a wild ride As of press time in mid December many economists were predicting first quarter 2018 GDP growth to be in the neighborhood of 24 For the full year the independent research group The Conference Board and the Federal Reserve forecast total 2018 GDP growth of 25 While thats below the 29 and 26 annual rates seen in 2016 and 2015 it still would represent one of the best two year runs since before the Great Recession Good fundamentals are behind the projections Business investment improved in 2017 after falling the year before while unemployment is ultra low Manufacturing has been on an upswing along with consumer optimism though both at press time were down a bit from their fall peaks And housing has more bright spots than dim ones In other words more cylinders in the economic engine are more evenly firing For trucking a combination of the strong economy combined with capacity pressure from hurricane recovery and the ELD mandate is creating a very tight market and rising freight rates for carriers Whether that carries through the first quarter depends on how mandatory ELD implementation and enforcement is going along with the usual uncertainties of severe winter weather and other first quarter surprises Evan Lockridge Business Contributing Editor elockridge@ truckinginfo com Evan Lockridge covers business and economic news for HDT both in this monthly column and on Truckinginfo com A freelance writer he has been covering the trucking industry in print online and on the air since 1991 SOURCE U S COMMERCE DEPARTMENT BUREAU OF ECONOMIC ANALYSIS 6 5 4 3 2 1 0 1 2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017 Real GDP Percent Change from Preceding Quarter