Monday, June 27, 2011

Truck tonnage confirms growth pause


Truck tonnage fell in May, most likely due to supply-chain interruptions and higher oil prices. Calculated Risk has more details. I offer this updated chart to show how closely the stock market, not surprisingly, tends to follow the ups and downs of the physical economy. I also note that truck tonnage is a very real indicator of economic growth, and can't be artificially elevated by cheap money or misguided stimulus programs.

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

It's reasonable to expect that supply-chain disruptions are now fading, and that, combined with a 20% drop in crude oil prices over the past two months, should allow somewhat stronger growth to resume in coming months.

7 comments:

Benjamin said...

Fighting a recession with tight money is like trying to get toned the Karen Carpenter way.

Public Library said...

Ben,

The only way to get the economy going is to provide the incentive to save and invest.

Let me know when you hear of an attractive opportunity to save. I am all ears...

Benjamin said...

PL-

The world changes..and policies have to change alongside.

There was a time when capital was scarce. Back when I had hair, and dreams of playing shortstop for the LA Dodgers.

Now I am bald. A long time bald.

Capital today is abundant, global.

We don't need to incentive savers anymore. There is a Niagara of capital out there, seeking a home.

Japan has shown interest rates can go to zero, and they still have gluts of capital.

In the USA, Treasury auctions are swamped by buyers. Oversubscribed by 3 to 1.

Hedge funds, private equity funds, venture capitalists--everybody is crying about having too much money chasing too few deals.

Globally, people save money for retirement, schooling, housing, security---you have to save, even if interest rates are zero.

Today, the weakness is in demand.

Demand for real estate would probably surge is we saw some traction in prices.

Some mild inflation is a very good idea right now, especially if accompanied by demand.

At this point, I would not be averse to dumping money into the streets at night in moderate-income neighborhoods. They would spend it, boosting the economy. No loans would go sour as a result.

Real output, and income would rise. Tax receipts would go up, but not outlays.

Just telling it like it is.

Japan is Lesson No. 1 in what tight money will do to an economy. A modern economy never recovers, never regains equilibrium. It just goes into a secular downturn, one that lasts generations.

Public Library said...

Japan proved pushing the savings rate to zero and bailing out industry/exports versus solidifying savers has dire consequences.

We are heading down the very same road. The Fed should get rates back to 3-5% as soon as possible, let the companies that cannot cope with these cap rates fail, and let the market clean up the mess.

Otherwise, we are turning Japanese or Wiemar republic. Starting to look like a binomial trade.

Central Banks the world over are trying to bailout insolvent investments. Japan, UK, US, China, on and on. Such as waste of time and precious resources.

Benjamin said...

PL--

Wiemar Republic? With with PCE deflator running at 2.3 percent? PL, there were whole decades that if we had 2.3 percent inflation, that would have been greeted with open arms, and hosannahs for "beating inflation."

Reagan "beat" inflation and it was more than 5 percent when he left office.

And prices are probably cooling off now, what with oil taking a huge hit lately. Unit labor costs have been down or flat.

We cannot become a Japan or a Wiemar Republic--you gotta choose one doom scenario. They don't go together.

And Wiemar is out. No Fed chief would print money like that.

That leaves the Japan scenario--and we are on our way there.

We know what happens if you put inflation-fighting in front of economic growth. It is called Japan.

seekingtraceevidence said...

Reading the current pause as a 2nd Dip misses the seasonal pattern of summer slowness that has been in place since the 17th century. Much else is in strong uptrend, esp Help Wanted Online.

honestcreditguy said...

Comparing the past today is insane...
The ponzi scheme is over. The last 30 years were all bubble induced GDP...

America is on its last legs...better get used to it...When a chinese worker will work all day for $12...guess where the corporate elites will take their money....

The San Francisco Bay Bridge is even engineered in China...guess where the material is coming from...

The wall street cronies sold america down the river...Until they are all rounded up and thrown in jail along with their banker buddies and congress critter pets...say goodbye to the american dream..