While much of the American economy is about to enter a recession, there are a few specific industries that are not expected to follow. The current interest rates, continued inflation, and a slowing housing market makes it extremely difficult to predict the future economy.
Bob Costello, the chief economist of the American Trucking Association recently stated at the Moving & Storage Conference Annual Meeting that the future of the economy is certainly in the air. For those who are unaware, the American Trucking Association is the largest national trade association for the trucking industry that was founded in 1933.
Costello notes that inflation is ahead of the Federal 2% target annual rate. Furthermore, he references the surge of the economy in 2021 was mostly fueled by the trillions of dollars in federal COVID-19 assistance.
Costello believes the second half of the year will likely face a recession. One area that would make a major impact on the trucking industry are the high interest rates taking its toll on the housing market. While recent data from the U.S. Census Bureau indicates a slowdown in housing starts, he believes the housing sector is poised for a major rebound. This is based on the high demand for housing throughout the country, meaning we will build more homes, leading to more homes sold. This is also based on the fact that the labor market will remain tight, meaning the salaries will be higher for the workers.
Recent census data shows the U.S. unemployment rate in January declined to just 3.4%, which is the lowest since the spring of 1969. These levels of unemployment Is a significant drop from the 14.7% unemployment rate from April of 2020.
This unemployment rate, coupled with the amount of available jobs will force a higher wage for the workers. As the immigration and population growth have slowed, the labor force has struggled. This imbalance could be fixed if government leaders change immigration law to overcome the worker shortage. Without new immigration laws, this shortage will continue, forcing higher and higher wages for their workers.
Worker shortages are hurting specific industries, particularly the skilled trades like carpenters, electricians, plumbers, and trucking. This shortage comes from the longstanding stigma against blue-collar professions. Shockingly, the American Truck Associations is predicting that there will be a driver shortage of 160,000 drivers by the year 2030.
Despite the estimation, the trucking industry is beginning to see some improvement in terms of truck drivers employed. In 2020, there were roughly 900,000 employed truck drivers within the United States. That number had increased significantly by 2021, up to 996,000. This industry earned an impressive $875.5 billion in revenue within 2021, moving 10.93 billion tons of freight. As of 2022, there were 1.564 million people employed in the Truck Transportation sub sector.
There are a number of factors that are influencing the push towards individuals entering the trucking industry. First of all, the money aspect is a major driving force. For individuals looking to increase their revenue, the median weekly earnings of the 117.5 million full time workers were $1,037 which is less than the average for trucking workers at $1,116 per week. Even hourly wages are higher than those who work in other sections like administration. Many companies also offer signing bonuses for contracts, or even to reimburse their new employees for the driving school they must go through other factors pushing people into the industry is the idea of a stable job, a certain degree of autonomy, and that it is ultimately a different career path. There are a number of scholarships available as well to train the next set of truckers, like the Women in Trucking Foundation or the Michigan Diversified Trucking Association.
The trucking industry is a vital section of the U.S. economy. Its 2020 revenue and 10 billion tons of goods hauled in 2020 accounts for roughly three-quarters of all goods moved in the United States. Without the trucking industry, the supply chain is destroyed, leaving shelves without food and companies struggling to get their resources.
While the economy of American society is unclear, the trucking industry is poised to continue to take off. The trucking industry is responsible for an efficient supply chain, a high number of employees, and an extremely high pay for its workers. There are a few areas that will help push the trucking industry even further, like opening up immigration laws and improving the housing market as well.
If you find yourself in need of transportation services, no matter how large or small, contact a SAC representative today to get started!