There isn’t a perfect economy that exists. Inflation can be just as damaging to an economy as high business interest rates, high unemployment rates, or weak consumer and business purchasing power if the economy is expanding too quickly. Anyone who has ever managed even a small business during a recession knows that an economy that is moving too slowly can also have unfavorable outcomes.
The US economy is currently slowing down and appears to be on the verge of a recession, which could last through 2009 and into 2010. The inflation rate in China, which is 11% and far too high, is overheating the country’s economy. Due to slow orders and slow retail, which we now know are all related to some problems in the housing sector, there is now excess capacity in both the trucking and railroad sectors in the US.
Whatever the reason, the Online Think Tank is now concerned about the truck manufacturing industry because there isn’t really a need for new trucks until the orders and need for inventory pick up speed again. In fact, even a modest initial increase in orders would only use up the extra capacity that is currently available. As a result, it seems like a long time will pass before new truck and trailer orders resume their previous level of vigor.
What does all of this entail for the trucking industry? It entails layoffs at truck and component manufacturers until the economy improves. Aside from cost reduction, this also entails longer receivables for their vendors and the small businesses they work with. These concerns stem from our economic analysts’ close examination of the US truck manufacturing industry.