What Does 2023 Look Like?
Trucking has seen extreme changes in recent years from the boom brought on by the country’s response to the COVID outbreak followed by a sharp decline in demand as the intensity of the pandemic eased. We don’t expect to see such dramatic changes in either direction in 2023, but there are indications that the industry may have a good year. As we look at an array of economic data, two positive trends are emerging. The first is that employment growth plus other economic growth gives us hope that a recession may be avoided. The second is that construction is picking up, and that is always good news for trucking.
Outlook on Avoiding a Recession
TRUCKING
Given the contraction in gross domestic product over the last two quarters of 2022, many economists have been saying that a recession is unavoidable. Consumption is also down. Inventories have been increasing and people are buying less. Nevertheless we’ve found reasons to think a recession is not on the horizon. Here are some factors to consider:
Employment is up - If jobs are increasing strongly, it’s hard to believe a recession is imminent, and we have
BOOM BUST OR
been seeing sustained expansion of employment. The U.S. Department of Labor report in December reported 20,000 jobs added in construction. That’s an especially impressive number given that December is traditionally a down month for job expansion. Manufacturing has been adding about 13,000 jobs each month. Given that December is often a down month, we would not have been surprised to see zero jobs added in December, but in fact there was an increase of 8,000 jobs. Before a recession, you tend to see a contraction in jobs, and we’re seeing the opposite. From November to December, there were 223,000 jobs added across all sectors.
Imports are up at ports on the East Coast and the Gulf of Mexico - Although container traffic at West Coast ports is down, traffic at the ports on the Atlantic Coast and the Gulf of Mexico is booming. Some analysts think the downturn in container volume on the West Coast indicates the economy is cooling off, but we think it’s
because a significant amount of the container freight is being redirected to other ports for a variety of reasons.
Freight from Mexico is up - There has been a surge of imports from Mexico. Given the strength of this trend of freight coming in from Mexico, there are ample opportunities for trucking companies who can have a presence in Laredo, Texas.
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