LAS VEGAS. “Truckable Economic Activity,” that chunk of the Gross Domestic Product that spends time in trucks, looks to be getting off to a strong start in 2017, according to Robert Dieli, president of RDLB, Inc., a Chicago-based economic research and management consulting firm.
Speaking at the Heavy Duty Aftermarket Dialogue event here, Dieli said he expects the expansion phase of the business cycle to continue through 2017. “Domestic events, mainly those surrounding fiscal policy are expected to have the most effect on TEA over the course of 2017 and 2018.”
The main components of TEA are consumption, investment, exports, imports and government. Dieli said the composition of TEA growth will continue to change. “We expect improvements in Truckable Fixed Investment and Truckable Exports. The adjustment to structural transformation will continue; of special concern is the implementation of electronic logging device regulations.”
Currently, 45% of TEA is consumption, 24% investment, 14% exports, 10% imports (imports are counted as a plus in TEA because they spend time on trucks) and government 7%.
Dieli said we are still in the expansion phase of the business cycle, but at some point there will be a boom and “we will begin to see economic instability.”
He uses something called the Enhanced Aggregate Spread, which is a nine-month forward forecasting model. “It is saying we should have expansion continue through the third quarter of 2017.”
Dieli spent some time during his presentation talking about how hiring patterns are a reliable indicator of trucking activity. General freight accounts for 69% of trucking hires while specialized freight (reefers, tanks, flat beds, moving companies, etc.) account for the other 31%. “Early in 2016 we saw a decline in trucking employment,” he said, “but that reversed itself and we have had strong increases in trucking employment since.”
The level of employment in the general-freight long distance truckload sector has not returned to the level it was at before the Great Recession, but the general- freight long distance LTL segment has exceeded the level it was at prior to the recession. Declines in the non-residential construction market have caused a drop in employment in the specialized freight sector, Dieli said.
He also believes there is some evidence of structural changes in how and why people are hired and how and why freight is moved. “We think the ELD mandate will materially affect how, where and why freight moves by truck,” Dieli said.