The major economic announcement this week was that second quarter GDP increased at a mild 1.5% annual rate, down from a 2% annual growth rate in the first quarter of 2012. In the same report, the BEA announced that personal consumption expenditures also increased at an annual rate of 1.5%. Although these values indicate that conditions are worsening for trucking—but not alarmingly so—these growth rates do not capture the whole picture.
During the second quarter of 2012, Industrial Production moderately increased. Despite this increasing production, retail sales declined in each month of the second quarter of this year. So, although manufacturers are increasing their production of goods, consumers are not buying this additional output. The below figure illustrates this divergence.
Why is this discrepancy relevant for trucking? In my previous post I discussed how inventories are accumulating at the manufacturer and wholesale level, while retailers are trimming their inventory volumes. Thus, even if industrial production is increasing, demand for trucking will be tempered so long as consumers continue to cut back on their purchasing.
Pay close attention to the retail sales numbers over the next few months as a key indicator for the current state of trucking.