Double-dip recession unlikely, FTR says

The economy may not be rebounding as quickly as most would like, but the chance that the U S will suffer a double-dip recession is remote, economist Noël Perry said during the FTR Associates “State of the Freight” webinar July 23.

While generally upbeat, Perry said that because the economy is not growing as fast as previously anticipated, this affects the FTR base forecast for the trucking industry. As a result, the lower end of the company’s outlook for truck and trailer sales is more likely.

The slow growth, however, is normal and not a cause for alarm. The housing market is a primary reason for the slow growth. That industry continues to feel the effects of what Perry described as artificially inflated home ownership that began in the 1990s. He believes it will take two or three years before balance returns. However, several positive factors bode well, including the fact that prices (when inflation is considered) are at historic lows. In addition, the inventory of new homes is very low.

Perry downplayed the lingering high unemployment as an impediment to economic rebound. Personal income among those who have jobs tends to pull the economy out of decline. In the later phase of the recovery, employers become more confident and add people to their payrolls.

He also spoke highly of domestic manufacturing. U S manufacturing production continues to grow—as it has since 1947—in spite of manufacturing growth in China and other countries.

Manufacturing jobs have gone away, but services have increased.

Government borrowing is playing a role in economic performance. Perry said the next recession will probably be associated with this debt.

In the transportation sector, Perry said the surplus of trucks and trailers is shrinking and that truckload carriers are enjoying improved margins. He expects that fuel prices will remain relatively low for perhaps two years.

The webinar was produced by FTR Associates, a market research firm specializing in transportation. The complete webinar is expected to be available July 26 on the company’s website, www.ftrassociates.com.

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