THE FACTORY

 Every weekday for as long as I lived in our house, my father awoke at 5:30 a.m. to get ready for his 7:00 a.m. shift at THE FACTORY. Occasionally, I would arise before he departed. He would be smoking a cigarette, finishing his last cup of coffee, and reading the newspaper. We wouldn’t talk much since I was interfering with his routine. At some point, he would look at the clock, gather his black lunchbox and Thermos, and be off. He would return around 3:30 each day.

I didn’t know what happened at THE FACTORY until one day my mother explained that my dad made “wheels and brakes for airplanes.” She told me this so I could answer the question if asked by the kids at school or anyone else. My mother was not proud of my father’s job. She had married significantly below her social standing. She probably told people company name, which was highly respected, but was coy about him being a factory worker. I, however, was extremely proud of my father’s vocation. I may not have understood why planes needed wheels, but they needed to stop, and my dad made the brakes to stop them.

I was never inside THE FACTORY, but I did know what it looked like from the outside. Occasionally, in the summer, we would drive by THE FACTORY. My mom challenged me to locate my dad’s car in the crowded parking lot, more than a hundred yards from the highway. I was ecstatic the day I spotted it, and once I knew where he parked, it was easy to do.  

Other than that, I didn’t think much about THE FACTORY, but I should have. It was THE FACTORY that fed me, clothed me, and put the roof over my head. It was THE FACTORY that provided a stable, middle-class existence, allowing me to sleep soundly every night. It was THE FACTORY that paid my college tuition, so, ironically, I never had to work a single day in a factory. THE FACTORY was life-giving – from the day I was born until I moved out at age 22.

Soon after I left, my father retired from THE FACTORY with almost 40 years of service. He earned a gold watch for his time there, an oddity for a factory worker. I still have the watch. I don’t know the intrinsic value. That doesn't matter because it's not for sale at any price.

THE FACTORY was sold to another firm in 1987 to fend off a corporate raider. THE FACTORY had a new owner again in 1996. In 2016, that company closed THE FACTORY, and hundreds of workers lost their jobs. And hundreds of children lost their life-giving force, and didn’t sleep soundly for many nights. After more than 75 years of providing life-giving benefits to thousands of people, THE FACTORY lay dead.

But the demise of THE FACTORY was not unique. U.S. factory employment peaked at 19.5 million workers in 1979 and has declined by 34% to around 12.8 million today. Thousands of factories have been shuttered, while manufacturing continues to flourish around the world. Of course, there are several reasons for the decline, such as productivity gains and technological advancements. But that can’t fully explain a 34% decrease in the U.S., when worldwide manufacturing increased at an estimated 135%.

 

A Resuscitation Attempt

Now, there is an attempt to stop the loss of manufacturing jobs and actually increase the number of factories in the U.S. The critics howl that the jobs are “gone for good” and will never return. Well, the one sure way that will happen is to continue doing nothing. If you continue to sit idly by, that 34% decrease will accelerate as the world's share of manufacturing continues to increase. We have literally "done nothing” for over 30 years, and that has gotten us to this point. This is the best argument for “doing something” that you can find.

That something involves tariffs. Tariffs are criticized as being ineffective and disruptive in every economic textbook. Of course, none of the eggheads writing these textbooks have ever worked in a factory, and few have relied on a factory for income. Politicians scream that tariffs are bad, supported by lobbyist money generated from the importation of cheap goods.

Now we learn that almost every country already imposes its own tariffs against U.S.-made goods. If tariffs are so bad, why are they used so much? You can argue that tariffs contradict the principles of "free trade." However, if no one is following the rules, then there are no rules. You can argue for “fair trade”, but that is also a myth. How is it fair to humanity when many products sold in this country are produced by what is essentially “slave labor”? In a country where we are still grappling with the impact of the plantations, which existed for purely economic reasons, there are descendants of domestic slaves walking our streets wearing shoes made by slaves overseas. How many things are wrong with that picture?  

There is no fair trade because every country is out for its own best interest – it is what seems fair to them. Every country is fighting a trade war. If you choose not to fight, you get slaughtered – and the U.S. was getting decimated.

I’m not interested in all the analyses and commentaries on how these awful tariffs won’t work. Most of these are heavily biased due to the current hyper-politicized culture in which we live. They don’t really matter much at this point, do they? The tariffs have already begun and will either work or fail, regardless of the so-called experts’ opinions. It would be so much better if these gurus would concentrate on how these tariffs might work to our benefit instead of predicting economic calamity.

The tariffs are happening whether you approve of them or not, and it doesn’t matter your political bent. Yes, support our team even if you despise the quarterback.

If you are trying to create more factories in this country – go for it! If you are trying to give opportunities for mothers and fathers to provide better lives for their children - go for it with all your might. If you are mildly successful, it will be worth it. If you are wildly successful, maybe even THE FACTORY could live again.

 

 

 

I

 

 

Sluggish Economy For The Next Two Quarters?

In Review

I developed the Model T Stock Trends Model around 2001 to predict swings in the stock market/economy based on cycles in the commercial trailer market. The model correctly predicted the 2008 downturn but has been unreliable since, as the economy did not experience normal cycles in the 2010s and was then disrupted by the pandemic.  

 

Last Time

My previous post declared that the economy might be in trouble since commercial trailer production was declining and orders were weak. Based on this, I updated the Model-T to see what it indicates about the current economic environment.

 

What the Model Shows

The 12-month moving average of trailer production began to fall in November 2023. Historically, the model predicts a downturn will start right now. However, except for the recent stock market gyrations, things appear fairly stable.

What could be different with the model this time? Even though the trailer market appears to be reverting to a natural demand cycle for the first time in years, conditions were far from normal after recovering from the economic turmoil in 2020. The Great Supply Chain Clog of 2021-2022 resulted in tremendous pent-up demand in the market, resulting in robust production through most of 2023. The depletion of this pent-up demand may have pulled forward the peak production point a few months, and that inflection point is critical for the Model T. Therefore, the natural market peak may have occurred in Q1 of this year, which would predict a possible stock market drop/economic stress in Q4.

 

Interest Rate Factor

The expected quarter-point interest rate cut may mollify a Q4 slowdown. However, some analysts claim this is too little – too late. Regardless, it will take a few months for the rate cut to impact the economy. The stock market has already reacted to the expected rate cut and is on a “sugar-high”. This exuberance will not last if Q3 earnings fall below expectations, as some analysts warn.

It is also significant that the FED is lowering rates due to economic concerns while interest rates remain “sticky". The risk here is that the interest rate cut will successfully stimulate the economy but increase inflation beyond the current 3%. While not ideal, it is better than a recession.

 

The GDP Forecasts

Here are some recent GDP forecasts. The Conference Board is the most bearish, signaling at least the possibility of a mild, short recession in the 2024 – Q4 to 2025 Q1 period. This forecast would be most consistent with the Model T.

 Trailer Market Concerns Remain

Trailer production, despite the drop from last year, remains decent, which is good news. However, orders have been weak for the past three months, which has pushed backlogs to concerningly low levels. Orders should remain tepid in August due to seasonal trends. Therefore, the September and especially the October trailer order numbers will be critical in determining the economy’s health in the first half of 2025. If October orders are much below expectations, it may indicate a recession has already begun.

 

The Call

The Model T is signaling weakness ahead. GDP growth of 1% or under in Q4 is likely, with GDP of under 1.5% in Q1 2025 possible. No recession is expected at this point, but we have a tough six months or so ahead.

Caught In A Sticky Situation

Where Ya Been?

This is my first post here since 2021 and my first independent post since 2013. When I began working at FTR in 2013, I didn't want to post anything inconsistent with the official FTR economic forecast, so it was decided I would repost my FTR blogs in this space. I retired from FTR in 2022.

But Why Now?

This blog began in 2009 and was based on the premise that demand for commercial trailers is a leading indicator for the general economy and the stock market. Although the connection has not been tight for many years, it may be changing now. If you are new to this blog, I explain stuff in basic terms – I don't try to impress you with my economic knowledge. I do want to impress you with how much of this you can understand. 

Where Are We At?

We've had a long period of brutal inflation that persists. The Fed wants inflation near 2% before cutting interest rates, but inflation is sticky and is currently stuck at 3%. 

How Did We Get Here?

The simple definition of inflation is: Too much money chasing too few goods. When goods are scarce, you are, in effect, bidding against other consumers to obtain those goods. This pushes the prices higher. When the price of cabbage becomes too high for you to buy, the cabbage goes to someone else willing to pay that price.

During and after the pandemic, the government injected a tremendous amount of extra money into the economy to help people recover. However, they poured in way too much—there's your "too much money." At the same time, the world's supply chain was slow to recover after being shut down and failed significantly to produce enough products to meet the surging post-pandemic demand—there's your "too few goods." This combination caused inflation to spike.

Then, the government continued to shoot money out like a water cannon. The Inflation Reduction Act increased the money supply, as did the infrastructure bill. Even college loan forgiveness increased the money supply because it gave those benefitting from it more money to spend.

Somebody in the government said while all that spending was going on (I can’t find the source) that the strategy was to “Spend our way out of inflation”). This has to be the most moronic economic statement of all time. But politicians make lousy economists, and economists make lousy politicians. The sad part is that the economic imbeciles spend the taxes we pay. Politicians are experts at getting reelected and not much else. 

The Fed’s End Game

The Fed should be credited with raising interest rates to the point where inflation has declined, yet the economy has continued to grow and create jobs. However, we are nearing the end of this chess game, where the next move can either win or lose the game.

Late last year, Wall Street expected the Fed to cut interest rates three times in 2024. This was equivalent to the Fed promising to give the "money people" a pony sometime soon in the future. However, inflation was very sticky – not at all transitory – ha! – and there have been no rate cuts yet. There has been no pony – and Wall Street has been pouting the whole time.

Inflation is at 3%, but the Fed wants it near 2% before a rate cut. The problem is that the economy is showing signs of weakness. Consumers struggle due to persistent inflation, higher interest rates, growing debt, and depleting Covid cash. The Institute for Supply Management Service Sector Index just entered contraction territory, indicating that consumer discretionary income is getting squeezed. In addition, the manufacturing sector has been woefully slow to recover.

If the Fed does nothing, mild stagflation (inflation persists, but economic growth is stagnant) could result. If the Fed cuts rates too soon, it risks jolting the economy back to life, which could reignite inflationary pressures. There is tremendous pent-up demand in the housing and business investment markets as buyers wait for interest rates to finally fall. This is a tough choice and a sticky situation indeed.

Wall Street is expecting a rate cut, finally the pony!, in September. This may still be too early, and there is the political element of cutting rates before the presidential election. The rate cut wouldn't produce immediate results but would be trumped by some as the end of inflation this time around. A more prudent approach would be to cut rates in November. 

What Does The Trailer Market Say?    

This brings us back to why I have emerged like a hermit from the cave. My premise for this blog is that cycles in the commercial trailer market precede changes in the general economy and stock market. This was true in the 2000s. However, the Great Recession rendered this, and all leading indicators, unreliable in the 2010s. In 2019, the economic environment was beginning to normalize, and then, BLAM! Presently, The economy is trying to shed inflation and showing some signs of returning to historic trends. 

Now, the commercial trailer market is flashing YELLOW. May orders were pathetic (the lowest since 2020), and the 2024 build forecast keeps sliding, now below the replacement level for the first time since 2020. Typically, June and July orders are the weakest totals of the year. If they are similar or even moderately higher than May, backlogs will fall to traditionally weak levels. 

The good news is that the market is forecast to recover some in 2025. However, that forecast assumes decent GDP levels, which are suspect if the trailer market continues to fade. Therefore, the commercial trailer market should be carefully watched for the rest of the year. If orders are strong in the traditional order season, October-December, the economy should be fine in 2025. If not, the new president, and now there will be one, could face an economic downturn as soon as Q1.

How Demand Outpaced Supply

Mr. Demand and Mr. Supply were constantly jogging along the Economic Trail.  Most of the time, they ran in tandem, at about the same speed. But sometimes Mr. Supply ran ahead of Mr. Demand and often the roles were reversed. But then, they would instinctively adjust their pace to get back into balance once again.

Mr. Price always accompanied Mr. Demand and Mr. Supply on the trail. Mr. Price could be unstable so instead of jogging he rode a bicycle. When Mr. Demand got ahead of Mr. Supply, Mr. Price would pedal faster to get ahead of Mr. Demand. Then he would force Mr. Demand to slow down so Mr. Supply could catch up to him. When Mr. Supply ran ahead of Mr. Demand, Mr. Price would drop back, causing Mr. Supply to slow down and Mr. Demand to speed up. In both circumstances, as soon as Mr. Demand and Mr. Supply were back in sync, Mr. Price could be found pedaling right beside them.

Everything was moving along fine on the Economic Trail until March of 2020 when both Mr. Demand and Mr. Supply were infected with COVID-19. Both guys immediately stopped and sat down on the trail  to recover. Fortunately, Mr. Demand had only a mild case of the virus. Soon he felt much better and started running again at a modest pace.  Unfortunately, Mr. Supply got much sicker from the virus. He lay weak and dormant for a couple months. He finally got up and tried to run but stumbled along at a slow pace.

Mr. Demand continued to recover and picked up the pace. His Uncle Donald even gave him some strong coffee to help his recovery. Mr. Demand was now running much faster than still sickly Mr. Supply, and the gap was widening. Mr. Price had also been infected but was asymptomatic. He had stopped on the trail, waiting for Mr. Demand and Mr. Supply to recover. He had followed Mr. Demand back on the trail and expected Mr. Supply to follow them, but he had not.

Now Mr. Price was pedaling faster but didn’t know quite what to do since Mr. Demand was not slowing down and wasn’t concerned at all that Mr. Supply was falling so far behind. The gap between Mr. Demand and Mr. Supply had not been this wide for many years.

Even though Mr. Demand appeared to be healthy, his Uncle Joe was concerned he was not running fast enough. So, Joe gave him an energy drink, a stimulus, to get him to run faster. But no one was concerned with the condition of Mr. Supply. Even though Mr. Supply was increasing his pace, Mr. Demand was still running much faster.

Uncle Joe was so happy that the first stimulus worked so well, he jolted Mr. Demand with a second energy drink. Now Mr. Demand was sprinting at top speed. However, even though Mr. Supply was trying to run faster, there were obstacles on the trail which slowed him down. He asked for people to work to help him run faster, but they were too distracted by Mr. Demand’s stimulus, to aid Mr. Supply. Others declined to help due to the persistence of the pandemic.  And some potential workers had left the trail altogether. He also needed a new pair of running shoes, but he couldn’t get them due to a shortage of silicon.

So, no matter how hard Mr. Supply tried to catch up, he could not, and Mr. Demand was now miles ahead of him. This motivated Mr. Price to pedal faster than he ever had since the 1980’s. He needed to get ahead of Mr. Demand and slow him down, so Mr. Supply could catch up. But he was pedaling so fast that his tires got overheated and are now highly inflated, and he fears a blowout, which could lead to a crash.

And so it goes ……

This post originally appeared in the FTR blog. For more information on FTR, the leader in commercial freight analysis and forecasting: FTRintel.com 

Let The Roaring Twenties Begin!

In ’21, we see an economic recovery unlike never before. Of course, I am referring to 1921, after both WWI and the Spanish flu had ended. But the country's mood now, as vaccines work to end this pandemic, is beginning to rise toward a euphoric state.

This, combined with tremendous government stimulus efforts, has caused the demand for goods to skyrocket. The GDP forecasts for 2021 continue to move higher. FTR (Freight Transportation Research) forecasts 2021 GDP growth at 6.1%. In the latest Wall Street Journal survey of economists, the range is from 2.4 – 10.0%, with the average at 6.0%.

The ISM (Institute of Supply Management) Indexes, which are forward-looking, confirm there is robust demand present now and in the foreseeable future. The March Manufacturing PMI spiked almost four percentage points to 64.7, the highest reading in 37 years! IHS Markit’s Index placed it at the second-highest reading ever. Likewise, the Services PMI jumped over eight percentage points, to 63.7, an all-time high.

The economic shutdown in March-May 2020 created enormous pent-up demand in the economy. It produced a “sling-shot effect”, where commercial activity was held back and then propelled forward rapidly. Therefore, substantial pent-up demand built up during the economic lockdown and was unleashed in the restart.

However, there was no pent-up supply, rather the opposite, in fact. Factories shut down, during well, the shutdown. Unfortunately, the restarts in many industries have been difficult. Manufacturers had to install COVID safety protocols. Workers have been reluctant to return to jobs either based on personal health concerns or generous government assistance. The global supply chain was also impacted, resulting in huge backlogs at the ports. Throw in February’s polar vortex, and you get an unprecedented widespread shortage of components, parts, and industrial output.

The result is surging demand combined with pent-up demand, matched up against constricted supply. Of course, this creates more pent-up demand since manufacturing has still not caught up in the short term. Pent-up demand clouds the economic forecast because it is difficult to measure and determine how long it will take to catch up. However, the ISM numbers show it is massive and growing.

For an estimate of overall manufacturing pent-up demand, it appears that the current supply of Class 8 trucks is running about 20% behind demand. Truck manufacturing is being impacted by the shortage of semiconductors, but many industries are not. Therefore, let’s estimate the total pent-up demand in all manufacturing at 15%. Meaning the supply is running 15% below total demand. Combine this with the enormous pent-up demand in the service industries due to the pandemic, and the economy is set up to surge in the next 12 months.

When there is another pandemic, perhaps world governments should expand the definition of essential workers to include those industries that should not be shutdown because their products are essential to a restart. They could receive government loans to build inventory and quickly repay the loans when the

inventory sells.

If you never understood what the Roaring Twenties were, you are about to get a very personal history lesson. But whenever I make that statement, the comment I always hear is: Yes, but remember what followed the Roaring Twenties.

Well, advancements in medical intelligence and technology have enabled us to significantly limit the fatalities from COVID-19 versus the Spanish flu, on a population percentage basis. Let’s hope our knowledge in the field of economics has made similar advancements.

This post originally appeared in the FTR blog. For more information on FTR, the leader in commercial freight analysis and forecasting: FTRintel.com 

Are the Fears Inflated?

You’ve probably seen the headlines about some economists becoming increasingly concerned about inflation. So, should we be concerned?  (Note: please keep reading. This is not one of those in-depth analysis involving T-bills and yield-curves, but more of a big picture, horse-sense type of view.)

Definitions

The most basic definition of inflation is: Too many dollars chasing too few goods.

A more precise definition from Investopedia:

“Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.” 

Some inflation can be good

Complicating Factors

Inflation is inherently challenging, because it means your money is worth less, because it can buy less goods or services. However, economists generally believe that a low, and steady, inflation rate of around 2% is good because it signifies a growing, healthy economy. Inflation, under control, does help to balance out imbalances in basic supply and prices.

We have not had to deal with high inflation for a long time. The last time inflation was above 5% was in 1990. The last time inflation was above 10% was 1980. The Clinton administration achieved strong economic growth, with low inflation, by significantly increasing imported low-priced goods from China. Economists labeled this strategy as “importing deflation”. This strategy worked so well it has been advanced by every administration since then, except for one.  But that’s a political discussion, and I’m not swimming in that pool.

The other factor limiting inflation has been technology, especially the tremendous efficiency benefits provided by the Internet. Technology and the efficiency it provides, lowers just about every type of cost, thus reducing inflation.

Current Situation

But let’s get back to this “Too many dollars chasing too few goods” thing. Why are economists concerned?

Too Many Dollars?

The government flooded the economy with cash in 2020 with the stimulus deals. This helped many people in financial distress, but many people received checks they didn’t need.  Consumers spent this windfall or saved the money for future purchases. And now, there is even more stimulus money on the way. From my point of view, there are too many dollars currently in circulation. This by itself might not be a problem, but...

Too Few Goods?

Ever since the economic restart, some goods were in short supply. The list included both consumer goods and industrial goods in an extensive range of industries. For example, there was a severe shortage of hotel towels in October, and some of those are produced in Pakistan. And now, there are reports of cat food shortages in some areas of the country.

While many of the shortages have been alleviated, some have intensified. We see the headlines for computer chips and steel, but we know in the commercial equipment industry that these products and a host of others are in short supply. The supply chain is in a mess. I’m guessing manufacturing material, and component shortages are in the worst shape since WWII.

So, we can’t make enough products to satisfy demand. Combine this with consumer products sitting on ships for days waiting to dock and then being delayed a few weeks due to port congestion, and you end up with too few goods. The inventory numbers confirm this.

What? – Me worry?

Federal Reserve Chairman Jerome Powell has finally admitted that he expects some inflationary pressure as the economy reopens but expects it to be temporary. Previously, he said he is not concerned because inflation doesn’t “change on a dime” and that a return to standard 2% inflation rates is not a danger. He also thinks the FED will be able to control the inflation once it starts.

In effect, he is saying they will be able to control the boulder once it begins to roll downhill.

What happens, however, if that boulder rolls right over the FED and anything else you put in its way. It’s like the old Chaka Chan and Rufus song: “Once you get started, oh it’s hard to stop”. Inflation isn’t something you want to see gaining speed quickly. 

Big Difference of Opinion

There are those economists sounding the alarm based on the factors previously cited and the movement in the 10-year treasury yield curves. But Chairman Powell and other economists in the Biden administration say “Move along, nothing to see here”. Of course, they can’t both be right. So, hope for the best, but be prepared for the worst.

This post originally appeared in the FTR blog. For more information on FTR, the leader in commercial freight analysis and forecasting: FTRintel.com 

 

If You Start Me Up - Restarting the Industrial Economy

 When the economy was in lockdown there was a strenuous debate on what would happen when the lockdown ended. One argument was the economy would stay in recession for months before gradually recovering. This view supported the case of preserving the lockdown since there was little benefit to opening back up. “You can’t just turn the economy back on like a light switch”, they claimed. The opposite view claimed that when the economy reopened, there would be a “V” shaped rebound, with the economy taking off like a rocket. This argument supported opening the economy up fully and immediately, despite the health risks.

As it turned out both sides were wrong, or at least only partially correct. After the fifty governors started reopening their state’s economies to one degree or another, economic activity jumped, but it wasn’t a capital “V” recovery. It was more like a lower case “v” recovery. This is because manufacturing has been lagging compared to the robust comeback in the consumer goods sector. When that proverbial light switch was turned on, the demand side of the consumer economy snapped right back, except for those contact-service industries. Demand also jumped on the industrial side but it is hard to gauge due to the

If you start it up!

supply factors discussed later.

Consumers who were able to maintain their income, spent heavily on goods and non-contact services. In many cases, they had even more disposable income due to government stimulus checks. It was relatively easy to restart the export goods pipeline, so easy the ports have been backed up for weeks as containers arrived.

Manufacturing Lags

It is much more difficult to jump start the industrial side of the economy. Factories were shut down for weeks. Some of these factories had never been idled except for a few days at the end of the year for holidays. There are startup and maintenance issues with some types of equipment. Workers need to be recalled, and material and parts inventories need to be replenished.

In addition, there were significant health factors involved in restarting the factories. Social distancing, disinfecting, contact tracing and quarantines all impacted productivity. Some workers declined returning to factory jobs due to personal or family health concerns. While many employees switched to working at home, this is not an option for production workers. There is also a major issue with government stimulus and extended state unemployment benefits providing a disincentive for reentering the workforce. In some states, the hourly unemployment benefit is close to or greater than the average factory wage. This is causing a severe worker shortage in certain industries.

There are also problems acquiring imported parts. Mexico remained on lockdown weeks after the U.S. restarted. Overseas producers rebooted more quickly, however; the U.S. ports were flooded with containers of restocking consumer goods. This is causing gridlock and delaying the delivery of key industrial components to manufactures for weeks.

All these problems resulted in a dysfunctional supply chain. There are steel, aluminum and wood shortages, among others. Even computer chips for autos and trucks are scarce. There are component shortages in many industries which are slowing production and raising prices. My sources tell me that the problems are intensifying in February, with no relief in sight. One manufacturing expert says “So the supply chain has basically dissolved.” It’s difficult to determine what the true demand is coming out of the lockdowns, but it is readily apparent that we have a supply chain quagmire, the likes of which this country has not experienced since WWII.

A Wide Gap Between Consumer Demand and Industrial Supply

The great disparity between the rebound in consumer market versus industrial is illustrated by comparing orders for van trailers, those hauling consumer goods, and those for flatbed trailers, used for transporting industrial goods. For the 2020 September-December time period, van orders were up an astounding 160% over the same period last year. Flatbed trailers were up only 31% (still respectable).

The good news is that flatbed orders have shown a noticeable improvement starting in November and are accelerating in 2021. The ISM PMI for manufacturing remains at high levels indicating that demand is strong for manufactured goods and is growing. Now supply just needs to catch up.

The Future for The Industrial Sector Looks Bright

The supply chain clog will be cleared at some point due to the laws of economics and the profit incentives of free markets. It could take an extended time since conditions are still worsening. The vaccine should lower infection rates and allow many people to return to the workforce, including factory jobs. Also, as state unemployment benefits run out, the job numbers could spike. This should drive down unemployment, and with the reopening of the travel and hospitality sectors, give a welcome boost to GDP.

This post originally appeared in the FTR blog. For more information on FTR, the leader in commercial freight analysis and forecasting: FTRintel.com