I have been expecting the economy to drop for some time. No economy can sustain unlimited growth. There will always be corrections. Not including the energy industry, our economy mostly relies on construction and the auto industry in one way or another. When those two segments begin picking up the economy will start to turn around. People are scared. They are beginning to understand that this stimulus package is really a huge tax on the American worker. They also see the government taking over much of the banking, insurance and auto industries. This is a new concept to most Americans. They don't know how to deal with a government run economy. Until the average citizen regains confidence in the economy things are not likely to improve. The thing that will help turn the economy around is spending. Because so many people are scared or uncertain about the future they are holding any money they have rather than spending it on things they may not need.
Trucking is very dependent on the auto and construction industries. When these segments turn around then trucking will begin to show improvement. The U.S. used to have a very diversified economy. That is no longer the case. We currently import more than we export and have for many years. Were our economy more diverse other segments would have a greater impact and the auto and construction industries would have less significance.
Carriers and owner operators are as scared as the general public. Many of them are taking freight too cheap to make a profit just to keep their trucks moving. It may work for the short term, but no company can operate for long without making a profit.
I had hoped that things would improve with spring. That is the way it usually happens. This year I wasn't very optimistic, but was hopeful. I really don't see much improving at least through this year and likely into next year. I think this will be a slow recovery. It will probably take several years to fully recover. Had the government not interfered in the economy things may have already started to improve more. There are some slight improvements in a few areas of the country. But for most of the country the economy is not doing well. I think that if the current administration would stop spending money the average American would start to gain more confidence in our economy. It seems that every day when you turn on the TV all you hear is how the government wants to spend more money. They can't even balance the budget and yet want to spend more money. People need to have confidence in our economy. I think that if the government would start to show some restraint and work to balance their budget it would encourage the American public and give them a boost of confidence.
Freight rates are tied to supply and demand. There is still too many trucks demanding more freight than is available. The result is a price war to the bottom. We still need more of the cheap freight haulers to go out of business. The more who fall the better it will be for the industry. I know it sounds harsh, but we still have an over capacity of trucks. At some point enough will go out of business and then the economy will turn. Rates should rise much more quickly with diminished capacity. It is difficult to put an exact timetable on it, but I expect to see more of a positive turn sometime next year.
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