Economic Stats Mixed, Interest Cut in the Works
February 28, 2001
The latest government numbers confirm what most truckers already know: Business is down. But there are signs of improvement.
This morning the National Association of Purchasing Management reported manufacturing activity increased in February for the first time in several months and there are indications that sector of the economy may be through the worst of the economic downturn.
Also this week the U.S. Commerce Department reported durable goods orders in January were down 6 percent, meaning there has been less freight to haul from companies that make products designed to last at least three years. It also means less freight for the companies that haul raw materials to plants, such as steel. Flatbed companies we spoke with confirmed the slowdown. However, some believe the worst may be over. "Freight has definitely picked up for us over the last three weeks or so," says Tres Parker with Boyd Bros. "It's nowhere to the point it needs to be, but it's getting there."
Another indicator of the slow economy: The government revised its fourth quarter economic growth figures downward from 1.5 percent to 1.1 percent, the lowest rate since 1955.
So is there any good news for trucking to hang its hat on? There are interest rates and consumer spending. Federal Reserve Chairman Alan Greenspan hinted before the House Financial Services Committee yesterday that the fed is eyeing its third interest rate cut of the year when it meets March 20. Although he said the dramatic slowing of late 2000 was "less evident" in January and February, he said the economy was still "on a track well below … its potential," even after two interest rate cuts in January. However, Greenspan said the abrupt economic slowing may prove "limited."
Despite the fact consumer confidence in the economy dropped in February, consumer spending moved up. Numbers released Thursday morning show another increase of 0.7 percent in January, after increasing 0.4 percent in December. Also consumer spending on durable goods during January increased 1.9 percent after falling 1 percent in December.
Also, a closer look at orders for durable goods reveals that when orders for aircraft and defense are removed, orders for other durable goods actually increased 6.5 percent in January. Although electronics were also down, businesses increased their orders of industrial machinery and equipment over December.