Tuesday, July 15, 2014

Are New Safety Rules For Truckers Backfiring?

I have noticed recently that truckers are driving differently on the interstate.  They appear to be changing lanes more and spending more time in the speed lane.  I would not describe this behavior as “aggressive” driving, because it is not dangerous, just different.  I do want to be clear that I am not complaining about anyone’s driving. The great majority of truckers are excellent drivers, obviously much better than the average person on the road.

However, if I am correct in this observation, something has indeed changed.  What could cause this? My guess is the change in behavior is related to the new Hours-of-Service (HOS) regulations. These are “regulations issued by the Federal Motor Carrier Safety Administration (FMCSA) governing the working hours of anyone operating a commercial motor vehicle. These rules limit the number of daily and weekly hours spent driving and working, and regulate the minimum amount of time drivers must spend resting between driving shifts.” (Wikipedia) 

There has been a loss of productivity due to the regulations, and there has also been a loss of income for many drivers.  It makes sense that truckers would try to be more productive when they are on the road.  This would translate into driving at higher (still legal) speeds and trying to get around traffic that is moving too slowly.

Again, I want to emphasize, this is totally logical behavior.  I would be doing the exact same thing if I was sitting in the truck driver’s seat.  It makes complete sense. 

The government instituted the HOS laws to make the roads safer by providing more rest for drivers, however, if truckers modifying their driving habits to compensate for the lost time, the roads may become more dangerous. If this happens, it would be a classic case of the “law of unintended consequences.” This economic law states that intervention (especially by government) in a complex system, creates unexpected and often undesirable outcomes.  The HOS instance would be considered a “perverse effect” that would cause actions opposite to what was intended (Princeton.edu) if my theory holds true.

Todd Spencer, executive vice president of the Owner Operator Independent Drivers Association, pointed out in a recent article that keeping trucks off the road in the middle of the night increases truck traffic during the day resulting in more interactions and more accidents.  He also says the law does not give truckers the flexibility to avoid congested urban areas during peak traffic.  Others have speculated that truckers may also drive faster to make their destination before they run out of road time.

So maybe I am just noticing heavier truck traffic and the different interactions that result from this.  Regardless, there is the potential for more accidents under the new, “safer” rules.

I don’t know if the HOS mandate will turn out this way, but somebody better be keeping score.  Accident statistics needed to be tracked constantly from July 2013 (starting date).  It also will be interesting to see the statistics on the time of day accidents are occurring.   If accidents increase during the day or in heavier traffic situations, then something truly unintended has occurred.

If accidents do increase as a result of the HOS mandate, of course truckers would be blamed and there would be clamors to tighten the law, not loosen it.  Consider the case of the Wal-Mart driver whose truck collided with a van severely injuring actor/comedian Tracy Morgan and resulting in one death. Reports say traffic was backed up on the highway and the driver failed to stop.

It appears the driver was just within his legal hours of service at the time of the accident.  However, police say he had been awake for more than 24 hours before the crash.  In addition, preliminary data shows the truck was traveling 65 mph in a 45 mph zone.

Based on the preliminary description of the events surrounding the accident, anti-trucking safety groups are clamoring for even tighter hours of service restrictions.  Some claim the trucking industry is “out of control.” 

This case has received great attention because a celebrity was involved, but it is a poor argument for stricter regulations.  You can limit the time a driver is on the road, but you can’t dictate what he does off the road.  If he was awake for more than 24 hours straight, he should not have been riding a bicycle let alone driving a big rig.  Also, going 20 miles over the speed limit and plowing into stopped traffic is not going to be fixed by more rest.  There is clearly something else going on here which should be revealed during the trial.

Friday, June 20, 2014

The Trailer Market Doesn’t Trail - It Leads

I had just started trying to forecast trailer market demand many years ago, when my boss hastily entered my office.  He was out of breath from running up the stairs, so I knew something important was up.

“I just came out of the staff meeting. We were discussing the trailer market and came up with a great idea.  All we have to do is find the leading indicator for the trailer market and we then we can forecast it,” he enthusiastically proclaimed.

Of course I wondered how much time it took and how much sheer brain power had been exerted to come up with this seemingly brilliant conclusion.

My boss stood there wide-eyed with an exuberant expression that implied there was something more to this and somehow I was involved.

“What did you tell them?” I asked, as I sensed where this might be leading.

“I told them you would find it!” he announced with a smile.

And then he spun around and left my office as quickly as he appeared, before I could utter one word of protest.

As daunting as the task was, I embarked on it. After all, the executive staff wanted it done and my boss actually thought I could do it.

I looked at all the standard economic data and reports, and none of those worked.  I then tried some other factors more focused on trucking and freight, no luck.  I even tried some obscure indicators that had no logical basis, nada.

No matter what I tried, I could not find anything that proceeded the commercial trailer industry in the economic order of things. And then, of course, there was that magic moment of revelation:  if there is no indicator leading the trailer industry, then the trailer industry must be a leading indicator.  My search was the equivalent of looking for the Holy Grail while sipping wine from this fancy chalice that I found.

Based on that premise, I have compared the trailer market to other respected “early” leading indicators.  Many people believe that the cardboard box market is the best leading indicator around.  It is so well respected that you can buy the monthly cardboard box industry data from a trade organization.  The theory is that before you can ship products, you will need the boxes to ship them in. Increases in box production would precede shipments, which would precede economic growth.

Good theory, but how are those filled cardboard boxes transported?  That would usually be a on a trailer. And what is the lead time for a trailer, from spec’ing, to ordering, to producing, to delivery?  It’s much longer than just making standard cardboard boxes.  In addition, cardboard boxes are used primarily to move consumer goods, which provides an indication of the direction of the consumer market.  Trailers are used to move all types of goods, for a wide variety of sectors.  Therefore, trailers as a leading economic indicator provide a much wider scope than cardboard boxes. 

I have tracked the trailer industry as a leading economic indicator for years, and have found it to be fairly reliable.  It is a better indicator than Class 8 trucks because that market gets too much influence from federal regulations and improved technology.  The trailer market has become a less reliable leading economic indicator as this “stalled economy” has stumbled on.  However, many other respected economic indicators have failed during this time.  For example, the ECRI (Economic Cycle Research Institute) Leading Index, one of the most respected leading indicators, has been less dependable the last few years. 


If you are in the transportation industry but are not involved in the trailer segment, it is still important to track it for all the reasons listed previously.  In addition, the trailer market is literally tied to the truck market, so trailer demand can confirm truck demand and provide clues to where the Class 8 market is headed.  The two markets may diverge in the short-term, but not in the long-term.

And what is happening in the trailer market now? Good things, many good things.  Orders are up 40% year-to-date, backlog is up 30% versus a year ago. 2014 build is forecast to be 8% higher than last year and could go higher based on some of the OEM build plans.  An analysis of trailer market segments indicate that consumer spending will be strong the next 12 months, and disposable income is growing.  Road and other infrastructure spending is expanding at a healthy clip, while housing starts are still moderate.


This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)

Wednesday, June 4, 2014

When Will The Unemployment Rate Increase?

The economy may be picking up steam, the jobs reports are sounding more positive; so when is the unemployment rate going to increase?  Going to increase??  Yes, increase.

It all has to do with the labor participation rate which has been in the news frequently in this cycle because it remains so high.  During a recession, and during the early stages of a recovery, many people quit looking for work because there are few jobs available.  These people are not counted as unemployed because they are not actively seeking employment and are not factored into calculating the unemployment rate.


However, as a normal recovery progresses, these people reenter the workforce in droves to compete for the many jobs being created.  Since there is still a lag time for these “reentries” to find a job, the unemployment rate can jump up for several months as the labor market resets.  You get a headline that reads:  June Shows Very Strong Job Growth - Unemployment Rate Rises.”  This sends the news commentators into a tizzy and confuses people.


But there is something unusual happening because the labor participation rate actually dropped in April as another 800,000 stopped looking for work.  The rate fell to 62.8%, a 35-year low (back before women started to enter the labor force in large numbers).

Why is the Participation Rate So Low?

Demographics

Because many baby boomers are retiring, the participation rate will remain lower than peak indefinitely.  Some economists claim this is the only reason for the low participation rate.  However, they ignore the other factors; they also ignore that many older workers were forced out of their jobs by the Great Recession and are too old to start new careers, so they retired “prematurely.”

Entitlements

Government assistance programs increased greatly after the Great Recession. Yes, these were needed to help people in true need. However, a large number of people figured out how to game the system and receive funds without making a serious effort to find work.  Regardless of your political views, the law of economics says that if you pay people not to work, you get less people working.

The Cultural Loss of the Work Ethic

There is a cultural shift going on regarding the “traditional” work ethic in the United States.  People with a strong work ethic have problems understanding this transformation and deride it, but that doesn’t mean it isn’t real.  Many people are avoiding work because they can. Whether it is the government assistance programs mentioned above or relying on friends and relatives, people are getting their basic needs met without having to work.

This cultural shift is largely generational.  I know of one company that closed a unionized plant in the north and transferred the work to a plant in the south.  However, the younger workforce in the new plant was much less productive that the old, and older, workers in the north.

Recently, MSN Money posted an article about how teenagers now do not want summer jobs. It says the number of teens with summer jobs has fallen 30 percentage points since the late 70’s.

This loss of work ethic, especially in the younger generations, has profound implications for our industry.  Older truckers are retiring and fleets need younger drivers to take their seats, but this is not happening.  FTR has been detailing the coming driver shortage and estimates there is a negative 4.3% unemployment rate for truck drivers (we need 4.3% more drivers than we have).  Truck driving is hard work and is not a desirable field to a generation that values hard work less.

We even saw this resistance to factory work back in 2006 when the trailer market peaked.  Some OEMs could not find enough workers willing to do factory jobs to staff their production lines.  Now that the commercial transportation equipment market is growing and OEMs are boosting line rates, this factor will come back into play.  The OEMs that gain market share in this upturn will be the ones that have the best access to new workers.

How Do We Respond To This Cultural Change?

Cultural shifts are very difficult to deal with in the short-term. Here are several of the factors in play regarding truck drivers:

Pay

Of course wages have to increase due to the forces of supply and demand, however things are jumbled up.  Because new workers value the job less than current workers, you will have to pay them more.  Two-tier wage plans are common in the auto industry, but there the current workers make more than the new ones and it is fairly easy to implement.  The situation now in trucking is an implementation nightmare.  You won’t find this one discussed in any economics books because it is caused by a major cultural shift.

Work Conditions

There will have to be major concessions to improve work conditions, and not just the obvious ones.  The younger workers have different needs and different viewpoints which require different solutions.  Distribution and warehouse systems may need to change significantly in the long run to accommodate this shift. 

Technology

A younger generation raised in a technologically advanced world expects their workplace to be technologically up to date.  It is the equivalent of an experienced worker starting a new job and being issued a Commodore 64.  New workers will not stay with fleets where the technology is not up to their standards, and their standards happen to be higher than yours.

Training


Very affordable training must be available.  Younger workers will expect training to be easy, accommodating to their needs, and inexpensive.  We should lobby hard for increased government assistance in this area.  Considering all the regulations that the government is imposing on trucking that hurts productivity and exacerbates the driver shortage, here is one thing it could do to help us. Come on Uncle Sam, you owe us on this one. 

This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)

Tuesday, May 13, 2014

The Economy Is Thawing Out

“Frozen” isn’t just a hit Disney movie, but a description of the U.S. economy in Q1.  But this economic “performance” was no comedy and the initial GDP estimate came in at a paltry 0.1%.  This caused economists to go into full panic mode and to question when economic growth will resume.

And to this I say: Chill.  Okay, that’s not the right term in this instance.  Alright then: Thaw. As in the economy on some days in January and February was literally frozen.  Snowstorms, blizzards and bitter cold shut down economic activity in some locations and severely limited commerce in others.

Some economists claim that the anemic Q1 GDP “can’t all be blamed on the weather”.  I guess that’s true, but this was the most economically damaging winter since 1978.   And 35 years is too long for anyone to remember how that works (similar to forgetting how a recovery looks in my previous post).
It is very difficult to measure the full impact of the weather in Q1. I don’t have insight to how all industries were impacted, but I do have insight on how the commercial trailer industry fared.  I estimate that January production was reduced by 10% due to weather related factors.  Production was slowed also in February to a lesser amount.  The trailer industry is very representative of the U.S. manufacturing as a whole.

Another measure was the capacity constraints that showed up in the FTR freight measurements in Q1.  For example, YRC said Q1 freight flow displacements including service delays, pattern changes, and productivity losses, reduced profit by approximated $20 million. Shippers had trouble
There were many unexpected "Ice Road Truckers" this winter
moving goods during the severe weather conditions (no surprise there) but when freight doesn’t move productively, commerce gets restrained and economic growth suffers.  This may be a simple concept, but it is something the government bureaucracy should be aware of when the slew of planned trucking regulations start to hit.

Further evidence of the weather impact is the government data reporting non-farm productivity fell 1.7% in Q1 after being up 2.3% in Q4, 2013.  Manufacturing hours dropped 1.4%, and remember, Q4 numbers are impacted by the holidays.  Yes, the weather had a huge impact on manufacturing.

Weather issues also impacted the consumer side.  When you are “snowed in” you are not out “consuming”.  You are not going to restaurants, you are not shopping, you are not purchasing services, and you are not traveling.  Some of this business is recovered after the thaw, but not all.

The other thing you see is a slew of economic good news after conditions returned to “normal”. Retail sales, auto sales, manufacturing, industrial production and the leading economic indicators all started flashing positives.  The Economic Cycle Research Institute (ECRI) Weekly Leading Growth Index has been steadily climbing since the end of February.  Of course some of this economic energy is catch up from the “ice age”, but not all.  I believe this “restart” will provide momentum for stronger growth in the second half of the year.

Unfortunately the news about Q1 is expected to get worse.  Economists analyzing the data expect Q1 GDP to be revised downward and of course that would mean it goes negative.  This will lead to more wailing and gnashing of teeth about the economy.  But this is the equivalent of feeling uncomfortable now about how cold it was in February.  It is much better to concentrate on the good things happening in the present and the forecast for the future.

As the hit song from “Frozen” proclaims: “The past is in the past”.  The economy was very weak at the start of year, but it’s time to let it go.

This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)

Thursday, May 1, 2014

A Real Economic Recovery Has Begun – Finally!

I was sitting in my Northeast Ohio office in 1986 when the building began to shake.  I ran out into a hallway where a group of my alarmed coworkers had gathered.

“What was that?” someone asked.

“I’m not sure because I’ve never experienced one before, but I think we just had an earthquake”, I said.

No one agreed with me, although no other explanations were offered.  Just then an older engineer, who had once lived in California, came flying around the corner and enthusiastically asked, “Hey, did you feel that earthquake?”

No one believed it was an earthquake because they didn’t know what an earthquake felt like.  I believe that an actual economic recovery has started, but people are skeptical because they either don’t know or have forgotten what a real recovery looks like.

Now this is totally understandable when you consider that the last “real recession” (I am dismissing the mild recession of 2001-2002) was in the early 90’s, which means the last “real” recovery occurred over 20 years ago.

I believe a real economic recovery started around October of last year.  It was temporarily derailed by the harsh “Winter of 2013-2014”, but is now resuming.  If fact the bad weather may have actually provided momentum to the recovery, similar to bobsledders rocking the sled backwards before pushing it forward.

There is a business district near my home that was devastated by the Great Recession.  It started showing some evidence of life two years ago, but now there are some very obvious signs of recovery:

-         There are four major construction projects in process on the outskirts of the affected region.  There is a repair facility to support the fracking industry. There are two new office buildings, one medical and one professional.  The other project is a full-service hotel.  There is still more development planned and a nearby road is being expanded to support it.

-         The business plaza in the center of the district is being totally remodeled. The owner obviously believes he will have new tenants soon.  The office complex across the street is now at full occupancy, the first time in five years.

-         There is new “high-priced” housing construction in the suburb just west of the area.  A thriving housing market existed there before the recession, but no new houses had been constructed in at least four years.

And those “green shoots” that everyone has been seeking for the last five years are suddenly appearing everywhere.  Hotel usage is up, unemployment claims are down, manufacturing keeps improving, the energy sector has been revived.  Several economic indicators have begun flashing “green”. Yes, this is what the beginning of a real recovery looks like.  It’s just taken forever to get here and we have been disappointed so many times in the past that we are not convinced. 

There are two sectors lagging the recovery: Housing and Employment.  Housing has lagged the recovery from the beginning because it was the last to crash, the worst to crash, and it hit bottom after the recession had officially ended.   Therefore its recovery started late and it has been slow.  This was a different type of recession and this is a different type of recovery.  Usually housing leads us out of a recovery, this time it will lag, but not prevent, it from happening.  Credit is still tight, but once the financial markets fully heal and the job market improves, housing will grow just fine.

The unemployment rate is headed down. It is at 6.7%, 80 basis points lower than a year ago.  Normally this would be great news if it wasn’t for the drop in the labor participation rate.  The Great Recession created significant structural unemployment due to the high numbers of older workers with non-transferable skills who lost their jobs.  These people are going to have trouble finding work even in a recovery.  This makes the unemployment situation difficult to gauge.  I just overheard two business owners (one in manufacturing, one in service) bemoaning the fact that they both were having problems hiring enough workers.  With the increase in business activity, job growth has to follow soon.

The conventional wisdom is that the recovery is still lethargic.  This week a Wall Street Journal headline proclaimed: “Sluggish Recovery Proves Resilient”.  Only 26% of economists in the latest WSJ poll believe GDP will hit 3.5% or higher in either the Q3 or Q4.  The FTR forecast is in line with this thinking, with Q3 and Q4 at 3.1%.


But I believe the “recovery” train has left the station and will only pick up steam the rest of the year. If this is true, growth will be between 3.5% and 4.0% in Q3 and Q4.  It would start to look like a real recovery at long last.


The question that everyone has been asking for the last several years is: How long is it going to take to recover from a recession this severe?  The answer: This long. 

This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)

Wednesday, April 9, 2014

The Trucking Market is Feeling Good - Will the Economy Follow?

As I entered the exhibit hall at the Mid-America Truck Show last week, I could almost hear the Truck Market singing:

I never seen such a beautiful day
Looked like everything is coming my way
Feel like a bird just leaving a cage
Looks like my luck is
Getting ready to change

Oh yeah, welcome to the show indeed.  After suffering through the Great Recession and the “not so great” recovery, the industry has shown some very positive signs lately and these were all evident in Louisville.

You could see it:

-          The hall started to fill up fast and by afternoon the place was jammed with people.  When you have to be careful to walk around people “inside” the vendors’ booths, you know things are rocking.

-          Companies featured newer, flashier, displays (marketing budgets are back!)

-          Vendor space was full, there were even a couple trailer manufacturers in the far West Wing.  There were some foreign manufacturers with displays, relying on interpreters to make their sales pitches.

You could feel it:

-          There was a “buzz” about the place, an aura of excitement when you walked through the doors.  The truck market was back and people were giddy.

-          Everybody was smiling again.  The handshakes were strong and plentiful. Nothing like an increase in business to lift people’s spirits.

-          It was loud.  You had to stand close to people and talk louder.  This added to the very positive atmosphere.


You could smell it – and what you smelled was money!:

-          There was business being conducted, there were real deals being discussed.

-          New products were in abundance, because companies now anticipate increased sales. Competition is back baby! Because there is something to compete for.

-          One manufacturer beamed that they were building a new plant after having to close two older ones when the bad times hit.

The sun just came out
From behind a cloud
Now I feel like shouting out loud
Hallelujah, let the sun shine in
I'm feeling alright again

And it’s no mystery why the mood is so good.  Truck OEM’s are increasing production due to strong orders and trailer OEM’s are following suit to a lesser degree.  Of course this is putting pressure on suppliers to keep pace.  This is “good” pressure however, that we haven’t seen in several years.

This good mood is also contagious.  One of the reasons for the recent increase in orders is “buyer confidence”.  Just as increased consumer confidence precedes retail sales, increased buyer confidence in our industry leads to truck and trailer orders.  We don’t measure this at FTR (Freight Transportation Research), but it is apparent that fleets are more confident of steady freight growth and increased business than they have been in a long time.  People in this industry talk a lot and small and medium sized fleets often take their cue from what the large fleets do.

I wore out nine pairs of shoes
Walking this old floor
Never sang nothing but the blues
Now I'm singing me a brand new song
Standing in a new pair of shoes

The better news is that because the trucking industry is a leading indicator of the general economy, the increase in business activity and the positive business mood should be prevalent in other industries by the end of the year.  If that is the case, the economy could be experiencing a real recovery before too long. Yes, it sure feel good, feeling good again!

Sure feels good feeling good again
Sure feels good feeling good
Feels good again


(Sure Feels Good lyrics – Elvin Bishop)

(This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)

Monday, March 24, 2014

The Housing Market Is Cramping Up

The housing market keeps sputtering along.  While disappointing, this should not be surprising.  Housing was the last big segment to hit bottom.  This was a bubble-busted collapse. Housing had so far to fall that it did not hit bottom until the recession was almost officially over.  Housing starts were still dragging the bottom of the cycle months after the recession had officially ended. 

Consequently, housing started its recovery after other segments of the economy and has mirrored the trends in other industries.  It has been a long, tedious, series of fits and starts.  Just when you think promising growth has started, it stalls out.

Because of the housing’s impact on freight and the general economy, it’s a good time to check in on the state of this industry:

Housing Starts:

February Report: 907,000 (annual rate). -0.2% vs. January, -6% y/y

Trend: Housing Starts began to recover in 2009, but unfortunately haven’t gotten very far. 

Based on history and population growth, a healthy market now would be around 1.5 million starts.  This means that even when using December’s higher number, we are still 30% below where we need to be.  FTR is forecasting Housing Starts to average around 1 million (annual rate) in Q1 and then grow slightly each quarter.  This would make 2014 a good year compared with the last few, but still poor compared to the 1.5 million baseline.

Building Permits

February Report: 1,018,000 (annual rate). +7% vs. January, +7% y/y

Trend: Building Permits started to increase in October 2013 so it appears bad weather has hurt the total this winter.  Building permit numbers should continue to rise each quarter at a modest rate.

Home Builder Confidence

March = 47, February = 46, March 2013 = 44

Trend: The index had increased for eight straight months before declining significantly in February.  The index registered its second straight month below 50.  A reading below 50 indicates builders are negative about future market growth.
 
New Home Sales

January Report: 468,000 (annual rate). +10% vs. December, +2% y/y

Trend: Positive, but like Housing Starts, we have a long way to go.  New Home Sales have been very slow to recover and we should be above 700,000 in a healthy market.

Existing Home Sales:

February Report: 4.6 million, -0.4% from January, -7.1% y/y

Existing home sales are actually declining after hitting a peak in mid-2013.  They are back to where they were in 1998.

Home Inventories

March Report: Inventories are increasing moderately, but remain at very low levels. Inventories will have to increase to fuel a recovery and support normal sales levels, but sales are not sufficient to cause inventories to rise just yet.  This is a symptom of our cautious business environment.  Some analysts believe the very low inventory levels are holding back the housing recovery by pushing up prices and stifling demand.  Preliminary reports (NAR) have existing home sales up 6% in March.

Housing Prices

Core Logic reports prices up 12% y/y in January.  Prices continue to rise but are still 17% below the peak of April 2006. Also, 4 million homes returned to positive equity in 2013, but over 13% of residential properties with a mortgage still had negative equity at the start of the year.

The Big Questions:

Why are Housing Starts so low?

There are fewer first-time home buyers.  College graduates who would normally buy houses don’t have jobs, have high student loan debt and are delaying marriage.  Household formation was very low from 2008 to 2010.  It started to improve in 2011, but is still below the historical average.  There is large pent-up demand here, but without jobs and a growing economy this market isn’t moving.  Home builders do not need to build inventory if there are not first time buyers.

In addition many smaller builders were wiped out during the recession.  Those that survived are facing very tight credit conditions.  Large builders remain very cautious and are having problems finding enough skilled labor for the projects they have.

Why are Existing Home Sales So low?

Buyers are facing tighter credit, limited inventories, higher prices and higher mortgage rates.   You still have a high percentage of homes underwater, cautious buyers and sellers, and limited mobility due to a sluggish job market.

What happens next?

The housing market may
be taking a "squat"
Housing usually leads the economy, but it was the last sector to crash and thus has lagged the economy since 2009.  For housing to rebound, the general economy has to be functioning in a normal state.  There has to be growth and stability to support the housing market before it can flourish.

Compare it to a world-class distance runner who has a bad case of the stomach flu.  All the parts that make him world class are still functioning well.  His legs, his feet, his lungs are all exceptional. But he is not going to run very fast, nor very far, under these conditions.  Other parts of this economy: employment, financial, risk-taking, consumer confidence, are going to have to heal before housing has a solid base to launch.

(This post first appeared on the FTR website.  FTR is the leader in analyzing and forecasting the commercial transportation industry.  For more information on FTR reports and services, please click here.)