february2021 - 35

E CO N O M I C O U T L O O K
»The largest part of truckable economic
activity is truckable consumption,
accounting for about 43 percent.
39676787 | Maxim Blinkov | Dreamstime.com

Points to ponder
when preparing
for a recovery
Five areas of economic activity to
watch for signs of improvement.
By Robert Dieli

ECONOMIST, MACKAY & COMPANY, AND PRESIDENT,
RDLB, INC.
MacKay & Company specializes in market research for
commercial trucking, construction equipment, and
agriculture machinery. The company provides strategic
research and analyses to vehicle and component manufacturers, distribution and service channels, industry
associations, and private equity firms. With a long career
managing portfolios and coordinating domestic economic
forecasting programs, Dieli began RDLB, Inc. in 2001. In
this role, Dieli serves as an advisor to many firms in truck,
consulting, and financial services sector. He is also an
economist with MacKay & Company.

" Plans are worthless, but planning is everything. "
- Dwight D. Eisenhower.
Some of you must be wondering what kind
of a bet I lost with the editor to have to write an
economic outlook piece during these extremely
unsettled times. After all, with so much change
on the political, economic, and public health
fronts, how can one make plans? The answer is
in the quote above. Planning should be going
on at all times.
Regular readers of this column will recall
MacKay & Company has a proprietary measure
of the trucking economy called truckable
economic activity (TEA). If we start our planning exercises with a review of the current
dynamic within each of its five major components, we can get both a reading on current

conditions in the trucking economy and a
strong sense of where the trucking economy
is likely headed in the coming months.
We use the term " trucking economy " because
while there is a close connection between the
overall economy and the trucking economy,
they are not the same entity.
The largest part of TEA is truckable
consumption, accounting for about 43 percent
of TEA in our most recent compilation of the
numbers. This is also the least volatile of the
components because it is tied to everyday
activities associated with the movement of the
goods we consume. We expect this component,
which took a heavy hit during the pandemic
shutdown, to continue to rebound from that
hit. The major constraint on this variable will
be consumers' ability to get out and spend,
meaning the pace of vaccinations will be key.
The next largest part of TEA covers business
capital spending and all forms of construction.
We call this truckable investment, which is
currently about 23 percent of total TEA.
Activity here over the course of 2021 will be
driven by profits and profit expectations, and it
is here that most of the elements of uncertainty
we mentioned at the outset will come into play.
These factors will add to the already volatile
nature of this type of spending. You can expect
about as much bad news as good news over
the next year.
Elements three and four on our list are
exports and imports. Exports accounted for
13 percent of total TEA in the last tally, while
imports came in at 11 percent. Before we go on
to discuss those elements, it should be noted
that the sum of truckable investment, truckable exports, and truckable imports accounts
for almost half of total TEA. This is a far larger
share of activity than these sectors represent
in gross domestic product, and it is the basis
for our earlier statement that the trucking
economy and the general economy are not
the same entity.
For both truckable exports and truckable
imports, the major issue will be the supply
chain - the physical ability to move goods to
and from ports. A secondary element will be
how often ships arrive and leave from those
ports, as well as the availability of containers
along the entire length of the supply chain.
Tariff issues are still in play, but their role will
be far less important in the immediate future.
The last component of TEA is truckable
government, representing about 8 percent of the
total. The largest element of this measure is state
and local government spending on structures.
We think budgets are going to be constrained
as the full effects of the pandemic on state and
local revenues have still to be calculated.
Lastly, do not confuse a rebound with a
recovery. So far, we have rebounded, but we
have not yet recovered. Plan for recovery.

February 2021 | FleetMaintenance.com

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february2021

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