Fleet Management

Housing Starts Jump, Inflation Eases From May to June

July 18, 2001

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The roller coaster ride of economic reports that affect trucking continued yesterday, with news of housing starts and inflation.

The U.S. Commerce Department reported that housing starts in June increased 3%. This follows a revised 1% decline in May, and the June figure is more than 6% higher than levels from a year earlier.
The news surprised many analysts, who were forecasting slower growth in the market. The housing sector has remained one of the few bright spots in the sluggish American economy for much of the year, due no doubt to the six interest rate cuts made by the Federal Reserve earlier this year. That’s good news for trucking companies who haul building materials and the consumer goods put into these new homes.
Also on Wednesday, the Commerce Department reported the Consumer Price Index moved up 0.2% in June, compared to a 0.4% gain in May, equaling a 3.8% annual inflation rate. When volatile food and energy prices are removed from the June figure, inflation rose 0.3% for the month, compared to 0.1% for May.
This too is good news for trucking, especially since many economists say improvement in the economy may lie in the hands of consumers, and if prices rise too much, shoppers may close up their wallets. There is a belief that consumer spending will slowly increase later this year due in part to lower interest rates, which could be cut again in August, as well as to tax refunds that are starting to be mailed out to millions starting this week.

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