Postcard #2 from the American Trucking Association’s National Accounting and Finance Council’s Annual Conference – Economic Address by the ATA’s Chief Economist, Bob Costello

“Slowing, but Growing” was the message from Bob Costello, the ATA’s chief economist, when he addressed the National Accounting and Finance Council’s Annual Conference in Indianapolis, Indiana on June 11, 2019. Coming off of 2018, a great year for the trucking industry, this should not be surprising news, as that level of growth would be hard to maintain. He mentioned that although the risk of a mild recession in the next year is low, if all proposed tariffs go into effect, it would raise the possibility of a recession significantly.

Mr. Costello also mentioned that inventory has increased in the first quarter of 2019. He attributed this to two factors: the first was related to manufacturers and retailers stocking up on inventory due to fear of Chinese tariffs , and the second concerned the continued growth of online shopping. Many retailers now guarantee package delivery in 2 days or less, making it necessary for these items to already be in a nearby warehouse and not in a large distribution center that requires at least five days of shipping to reach its destination. He did not see the increase in inventory levels as a major area of concern.

One troubling sign that Mr. Costello sees in the future is the pressure on profits related to increases in driver pay and lower spot market rates, especially for smaller carriers. This convergence could cause these smaller carriers to be forced into severe financial hardship at the next downturn of economic activity.

Mr. Costello mentioned that consumer fundamentals are good and the job market is strong. However, retail sales growth has slowed this year and housing starts continue to disappoint. Inflation is in check for now, and the Federal Reserve has paused any upward rate adjustments at this time. Finally, Mr. Costello believes that the new United States-Mexico-Canada Trade Agreement will be ratified by all three countries.

Bob Costello has been the ATA’s Chief Economist for over 20 years. His presentation at the NAFC Conference was one of the highlights of the three-day event and was very enlightening.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Industry Keeps Eye on Rising Costs in Driver Recruitment and Retention
ATA Wins Decision Blocking Rhode Island Truck-Only Tolling Plan
ATA President Chris Spear Updates NAFC Conference
CISA Issues MiCODUS MV720 GPS Tracker Advisory
Mid-Year Optional Standard Mileage Rate Change in 2022
Reshoring to Combat Global Supply Chain Disruptions
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.