These days, countless analysts are working to understand exactly where the U.S. economy stands — and whether another recession is on the horizon. Because the levels at which truckers move freight can signal our economy’s health, analysts frequently study our industry for their projections, which accounts for five percent of the GDP.
So, on October 12, when the Ceridian-UCLA Pulse of Commerce Index announced that third quarter fuel purchases dropped more than any other non-recession period in the past 10 years, recession fears bubbled nationwide.
Why the correlation? At its most basic, the thinking goes like this:
When the economy is healthy:
Thus, increased fuel purchases indicate people are buying more products, so the economy is growing.
When the economy is unhealthy:
Decreasing fuel purchases mean people are spending less money, so the economy is stagnant or shrinking.
So, if fuel purchases dropped so dramatically, that must indicate trouble ahead, right?
Not necessarily. According to UCLA Anderson Forecast Director Ed Learner, "Two or three more months like this would confirm an official recession.” But, the answer may not be as simple. While fuel purchases were dropping:
If we’re moving freight at high levels and the GDP is growing, what explains plummeting fuel purchases?
Perhaps trucking companies are doing more with less fuel. According to the American Automobile Association, diesel prices have increased 14 percent this year. Combine skyrocketing diesel costs with new trucks and accessories that improve fuel efficiency, and we might be seeing the effects of truckers moving freight with less fuel, rather than signs of impending recession.
Of course, we at Getloaded aren’t economists or transportation researchers, but we’ll continue to watch this trend to share new developments as they occur. From our side, we’re certainly hoping fuel efficiency — rather than economic challenges — explain this new data!
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