Searching For Good News

Article by John Wagner Jr from Wagner Logistics published on November 8th 2013

Even as the economy limps along, there is good news to be found if you go looking for it.Wholesale prices in the U.S. unexpectedly dropped in September and food costs were down as well, indicating that inflation remains under control.

The Labor Department said that the September 0.1 percent drop in the producer price index followed a 0.3 percent gain in August. The “core” measure, which takes away volatile items such as fuel and food, was up only 0.1 percent. Lower costs for beef and vegetables helped lower the cost of finished consumer food by 1 percent.

Retail sales in September showed a 0.4 percent gain in autos, on the heels of a 0.1 percent increase in August. These figures from the Commerce Department were before the government shutdown, so it will be interesting to see if consumers will continue their spending ways. I’m not sure they will in time for the holiday season as consumers are in a dour mood. Perhaps the hopefulness of the season will win out?

The ADP National Employment Report said the 16-day government standoff hurt job growth as only 130,000 jobs were created. ADP revised its private sector September jobs numbers down from 165,000 to 145,000.

There is good news that the government’s fiscal 2013 deficit fell below 1 trillion dollars for the first time in five years as the slow-growth economy and higher taxes swept tax revenue into the U.S. Treasury at historic levels. The deficit stands at $680.28 billion in this October to September period. As a comparison, in the previous fiscal year the deficit was $1.089 trillion. While still historically high, the number is heading in the right direction after the Treasury collected 13 percent more revenue at $2.774 trillion.

However, spending was $3.454 trillion, so Congress and the president have their work cut out for them to come to an agreement over the budget and spending. By comparison, the deficit was $458.55 billion in 2008 and only $160.70 billion in 2007.

Transport News

In transportation, the American Trucking Association noted record truck tonnage in September as the measure increased 8.4 percent when compared to September 2012. The ATA freight index also set a record in August, rising 6.9 percent year over year. Sectors including oil and gas, home construction, and other heavyweight freight are driving this trend, according to Bob Costello, Chief Economist at ATA.

Carriers are reporting lost productivity due to the hours-of-service regulations implemented July 1. Several carriers are offering record pay increases to drivers as they attempt to offset lost productivity and retain good drivers.

Will there be a capacity shortage in 2014? It really depends on the economy. Given the climate in Washington, I just don’t believe they will get their act together until after the 2014 midterm elections. If the economy can begin to get over 3 percent GDP growth then yes, truck capacity will become an issue and we can expect to see trucking rates jump and intermodal rates follow.

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