MacKay & Company’s John Blodgett says trucking doesn’t miss recessions. In fact, it usually feels them before the rest of the economy.
Speaking Monday during the VIPAR Heavy Duty IMPACT Conference opening general session in Marco Island, Fla., Blodgett says trucking and the greater economy have been floating through a long, uneven boom phase of the economic cycle for two years. The economy isn’t growing like gangbusters anymore, but it hasn’t crashed either.
Blodgett says that doesn’t mean a recession is imminent. A boom phase in an economic cycle can last a couple months or much longer. But there are several trucking metrics that serve as leading indicators for potential recessions and Blodgett says most have their warning lights on.
Yet he adds there is some good news too. The Federal Reserve has spent the last two years shooting for a “soft landing” to curb inflation and they might end up succeeding. Core PCE ticked up above 3% last month but has held around 2.75% for most of the year. Even if an eventual recession occurs — Blodgett says the business cycle always has to trend down before it can grow again — the length of this current boom period, slowing inflation and Fed policies could make it a shorter one.
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“Our economist [Bob Dieli] believes there is a 60% chance a recession is declared before mid-year next year,” says Blodgett. “But he’s actually come down from 70%”
Aftermarket forecast still positive
Blodgett also used his time Monday to offer an update on MacKay & Company’s trucking and aftermarket forecasts for 2024 and beyond.
He says MacKay & Company produces two aftermarket forecasts for Class 6-8 trucks and trailers each year. The first is released at Heavy Duty Aftermarket Dialogue, with an update released in the summer.
In January, Blodgett says MacKay & Company was anticipating the aftermarket would grow by nearly 4% year over year in 2024, with most of that (3%) coming from price. Blodgett says MacKay’s summer forecast is mostly similar. The company has dropped its price inflation rate slightly (down to 2.5%), but says its overall U.S. aftermarket growth forecast rate for 2024 remains around 4%.
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Blodgett says that might be a “little high,” but adds MacKay’s polling of distributors, dealers and fleets during this indicates the market has been mostly stable. Blodgett says survey data indicates dealers sales are down 2.1% to date but are carrying less inventory than the aftermarket, which is off by 0.6% but has more inventory in stock.
In Canada, MacKay & Company’s forecast is softer, up only 1.5% year over year, with Mexico expected to be up around 3.3%. Looking out further, Blodgett says MacKay & Company has compound annual growth rates for the three markets as U.S. up 4.2%, Canada up 2.9% and Mexico up 2.6% over the next five years.
