Stagflation is the name of the game in the U.S. economy these days, and its likely to continue defining conditions in the months ahead, Chris Brady, president at Commercial Motor Vehicle Consulting (CMVC), told attendees during a MEMA Pulse webinar Wednesday.
Brady says the good news is stagflation doesn’t mean recession. The economy is hardly booming — only AI investment is notably strong — but it is creeping forward. Even with two wars overseas, tariff uncertainty across the supply chain and rising inflation putting pressure on interest rates and investment, U.S. GDP rose in the first two quarters of 2026 and is expected to be positive again when Q3 data is released later this month.
But Brady also notes an unremarkable economy with limited growth potential is more susceptible to hiccups, as are segments within it like trucking.
In giving his assessment of parts demand for the years ahead to MEMA’s member base, Brady says there’s good news and bad.
From a macroeconomic perspective, he says the flexibility the supply chain has developed in recent years is a tremendous asset for all industries. Historically low inventories across the economy also means a replenishment of product — and corresponding boom to imports and freight — is likely to begin soon, and could come as early as Q4. Additionally, while consumer and business investment has slowed, any slowing of conflict in Iran and/or Ukraine could stabilize energy prices and benefit the entire economy.
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Yet on the flip side, Brady notes “if you take out AI the economy is growing at a very slow rate,” and adds if an AI bubble is forming and bursts, it will have “a substantial downside impact on the economy.”
All of which leaves the trucking industry adrift, with carriers eager to put the 2023 to 2025 freight recession behind them but somewhat unable to earn enough new business to definitively do so.
Brady says the volume bump the freight market experienced in Q1 started driving up contract freight rates as early as March (the spot market started rising in 2025) and Iran conflict has enabled those carriers to tack fuel surcharges on top of higher prices. Coupled with the impending EPA 2027 NOx rule, carriers finally had an environment where they could invest in replacement demand but not much more.
As such, CMVC’s parts leading indicator (PLI) has reported stronger sales conditions for parts sales every month since February as carriers have attempted to get every last mile out of their older equipment while rates have been strong. But Brady anticipates that run of positivity will end in 2027. He says the ongoing pre-buy that’s driven new truck orders throughout 2026 is likely to drive down parts demand in 2027, particularly in the second half of the year, as all trucks ordered ahead of the NOx rule officially hit roadways.
Additionally, while in the longer term CMVC analysis shows the older half of the U.S. truck fleet (11-20 year old trucks) is anticipated to grow faster than its newer counterparts in the second half of the decade, the entire market is unlikely to grow at or above historical norms.
Brady says the economy isn’t projected to be strong enough to allow for more.
“We expect fleet capacity to remain relatively stable over the next couple of years,” he says. “It will meet freight demand, which will be sluggish.”
In that scenario, Brady says suppliers and distributors who can win with older truck owners and meet their demands on pricing, availability, brands against value lines and more will likely have the best chance to outpace industry averages.
