Fleet Management

NAFTA Economic Growth Continues to Slow

February 21, 2001

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The sharp slowdown in economic growth in the U.S. is beginning to depress economic growth in Canada and, to a lesser extent, in Mexico.

The slower growth in Canada and Mexico will be concentrated in the manufacturing centers exporting to the U.S. market: the Great Lakes region in Canada and the U.S. border regions in Mexico.
As a result, economic growth in the NAFTA region is expected to decline from 5.3 percent in 200 to 3.1 percent in 2001. A recovery to 3.5 percent is anticipated in 2002. Both the Canadian and Mexican economies are slowing, mostly due to slower growth in exports to the United States. Neither country has the cost pressures or surplus inventories that are restraining U.S. economic growth.
The current transition from overheated to average economic growth is probably overshooting on the low side. The economic news has been grim this winter. Production is less than consumption as excess inventories - both consumer and business goods - are being absorbed. This means less inbound freight to factories and distribution points.
By summer, inventories will be back to an acceptable level, so production will rise to match the 3 percent to 4 percent growth pace in consumer and business spending. While disappointing after a long economic boom, that is the sustainable long-term growth rate.

From "Newport's Trucking Outlook" newsletter.

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