Friday, June 16, 2017

So Far...Not So Good

“Trump gets a lot done in his first year and drives the mainstream media crazy.”- Neal Click 12/26/16

2017 is nearing the half-way mark and again my annual predictions turn out to be only half-right: “GDP growth at 3%” and “Trump gets a lot done in his first year and drives the mainstream media crazy.” At this point, we’re probably looking at GDP under 2%. And Trump isn’t getting much done, but he is driving the mainstream media (and everyone else) crazy.
I think a lot of us expected better things in 2017. If not from the new administration, at least from the economy. It felt like we might be on the cusp of a breakout from the anemic pattern of 1-2% growth. Apparently not.

I talk to people in all segments of the transportation and logistics industry. This is the most confusing economy I’ve seen in my lifetime. Reports from the transportation/logistics world are all over the map. Some segments are doing well, others are not. Within segments, some companies are doing well and other are not. It really depends on what industries and markets are being served. If you’re closely tied to automotive or “big retail” you’re probably not having a great year. If you’re closer to construction or other types of manufacturing you may be doing ok. If you’re disciplined and not adding too much capacity, too quickly; you’re being smart. If you’re finding ways to play in the e-commerce explosion… profitable ways to play… you’re being smart or perhaps you’re just lucky.

A lot of what’s going on doesn’t seem to make sense. Many large shippers are aggressively going after rate reductions at a time when the long-term capacity forecast would say that rates have probably bottomed out and are very likely to go up. I talk to companies on a regular basis that need to fill key positions, but aren’t willing or able to offer the level of compensation necessary to attract qualified people. At the same time, I see candidates who are unemployed or under-employed, but unable to find new employment because of location or experience or frequent job changes or any number of other random factors.

I think businesses and employees are uncomfortable and uncertain. There’s not a lot of confidence out there. And, that’s not good for the economy. Even where I live in North Texas, as things are about as good as they can be, there is a sense that the most likely direction is downward or at best sideways. In regions of the country where things have not been so good, the mood is even more negative. The anger and frustration that fueled Trump’s run to the White House has turned to malaise. And those who did not support him in the first place have essentially become a lynch mob. Not a good recipe for “Making America Great Again”.

Then there are the fundamentals. Government debt continues to climb and consumer debt is back up to Pre-Great Recession levels. The ‘juice’ created by low interest rates and Fed policy decisions has just about run its course. At some point, one has to pick-up the check. One cannot buy more stuff without cash or credit. And my sense is that we are feeling the effects of this reality. Add in the demographic shift as Baby-Boomers go from consuming to downsizing to retirement, and those generations coming up are unwilling or unable to follow in their predecessors “go big or go home” footsteps; and you end up with low-growth, limited opportunities for marginally qualified workers and an economy that will punish those companies that are poorly positioned or poorly run.

In other words, it’s tough out there. And this may just be the way it’s going to be. Slow or no growth. Changing markets. A nation too divided to move the needle on pro-growth legislation. A workforce unprepared for the new economy yet unwilling or unable to take on “old economy” jobs. But success awaits those willing to adapt, willing to learn and; most of all, willing to work hard. And that’s pretty much how it’s always been.

Some will win
Some will lose
Some were born to sing the blues
Oh, the movie never ends
It goes on and on, and on, and on
Don’t Stop Believin’- Journey

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