Headwinds are developing in front of the U.S. economy but that doesn’t mean a recession is imminent, MacKay & Company’s John Blodgett reported Monday during a presentation at the VIPAR Heavy Duty IMPACT Conference.
Blodgett said MacKay & Company’s research indicates the U.S. economy has now entered the Boom phase of the economic cycle. Blodgett said entering a Boom phase does not mean a recession is upcoming after a certain period of time, nor does the length of the current phase correlate to the length of a future recession. But in modern economic history, whenever there has been a Boom it has eventually been followed by some type of downturn.
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Blodgett said MacKay & Company is now anticipating that downturn to occur in 2023, citing inflation (and corresponding changes to monetary policy), a slowdown in housing starts, rising fuel prices, a shift in trucking employment and internal MacKay & Company metrics as indicators.
One of those indicators, Enhanced Aggregate Spread (EAS), has successfully identified every upcoming recession for more than 50 years. Quoting MacKay & Company in-house economist Bob Dieli, Blodgett said EAS is now trending in a direction that would indicate a recession is on the horizon, though he also noted it’s possible the pandemic and the global structural changes it caused may impact how precise the metric’s predictive possibilities are. Yet even without EAS as a leading indicator, Blodgett said those other factors are concerning. He said trucking employment crested in July and fleets are generally quick to right-size their workforce when demand lags.
Blodgett also provided MacKay & Company’s most recent aftermarket projections for 2023 and beyond during Monday’s session.
