What auto and long-haul industries say about US economy
Neil Irwin, writing in the Washington Post, put it this way, “Cars represent the demand side of the economy: The desire of Americans to buy the goods and services they want, need or enjoy. Trucks, specifically 18-wheelers and other big rigs, represent the supply side of the economy: The factories and shipping networks that make and distribute all those goods and services that consumers buy, including cars.”
It’s a simplified model, of course, but the soaring sales of cars express belief in the future and prosperity as well – the eternal human quest for the good life. This is somewhat corroborated by recent news reports that the number of homes in foreclosure is finally shrinking.
Other prognostications tell of a dynamic holiday season with new records for online shopping, possibly resulting in a temporary job boom, at least.
Meanwhile, the trucking industry and those hard-working Americans who ply our nation’s highways delivering the goods we all want or need are facing a shrinking economy, at least at present.
Irwin reminds that between May and August this year, US factory orders dropped 5.2 percent in August, as many retailers waited for the other shoe to drop. Everyone is waiting for the economists to unequivocally state the recession is over – to see irrefutable evidence with their own eyes. It probably is, but things are so volatile at present no one's really willing to come out and say so.
J.B. Hunt Transport Services Inc. (JBH) is the biggest publicly traded trucking company in the country. Third-quarter results released last Thursday afternoon, set the firm’s earnings at a penny a share below expectations, according to the Washington Post. Not much, but as the saying goes, every penny counts.
Its container business, shipping the big metal boxes by sea, rail or truck, reported strong growth, but the problem is in the trucking arm of its business. JBH hauled roughly 2,300 fewer loads July to September in 2012 than a year ago, dropping 2 percent.
The firm’s semi-trailers logged 6.6 million fewer laden miles last quarter, a decrease of 12 percent. That’s a lot of lost income to drivers and taxes paid by the industry, not to mention lowered inventories around the country.
The Dow Jones Transportation Average has also dropped 4 percent since June, while Standard & Poor’s 500 posted a 5 percent increase.
So though cars are selling briskly, sales of heavy commercial trucks are way down. Big engine builder Cummins Inc. has announced it may cut up to 1,500 jobs by year’s end due to a major drop in orders.
“As a result of the heightened uncertainty, end customers are delaying capital expenditures in a number of markets, lowering demand for our products,” Cummins CEO Tom Linebarger told the Post.