The US Economy is Rolling Along on Truck Tires
Real GDP may be starting to do so at a faster speed now, exceeding the so-called 2% “stall speed,” which was the so-called “New Normal” from mid-2010 through Q-1 of Y 2018
Consider the following:
A Supercharged Quarter: Friday, the Atlanta Fed’s GDPNow model boosted the Q2-2018 real GDP growth rate to 4.8%. That’s up from 4.7% on 32 May.
Below are the details
The nowcasts for Q-2 real consumer spending growth and Q-2 real private fixed investment growth increased from 3.4% and 4.6%, respectively, to 3.5% and 5.4%, respectively, after the employment report from the US Bureau of Labor Statistics, the construction spending report from the US Census Bureau, and the Manufacturing ISM Report On Business from the Institute for Supply Management were released this morning.”
Keep on Trucking: The ATA Truck Tonnage Index rose solidly by 9.5% Y-Y to a record high in April It has been rising into record territory consistently since Y 2013. Its Y-Y growth rate is a good coincident indicator of real GDP growth, though the former is much more volatile than the latter. There is a good correlation between the ATA index and payroll employment of truckers. Friday’s employment report showed that payroll employment in the truck transportation industry has been stuck just below 1.5-M for the past 6 months, but it is at a record high and up 24,200 Y-Y.
Note: Starting at the end of Y 2017, a new federal rule requires all interstate truck drivers to install an electronic logging device, or ELD, that logs their hours. Truck drivers are required to reduce their overtime hours because fatigued ones have been involved in major crashes on the highways. That could exacerbate the perceived shortage of workers. The Y-Ygrowth rate in the average hourly earnings of truckers is very volatile, but April’s increase of 2.5% was subdued and belies the shortage-of-truckers talk.
Wages and Hours are rising: There has also been lots of chatter about a shortage of workers in other industries. Yet overall wage inflation remained moderate at 2.7% Y-Y during May. However, it continues to exceed price inflation, currently running around 2.0%.
Note: According to the payroll survey, employers in the private sector managed to find 218,000 net new hires last month, a solid increase, for sure. According to the household survey, the number of full-time employees rose 904,000 last month to a new record high. Manufacturers have increased average overtime weekly hours from 3.2 hours a year ago to 3.5 hours during May.
Aggregate weekly hours worked for all private industries rose to a record 4.36-B hours during May, up 2.2% Y-Y. Indexes that track wages and salaries in private industries, rose to another record high last month. This bodes well for consumer spending in particular and GDP overall.
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