Truckable Economic Activity is expected to continue at its current pace, according to Dr. Bob Dieli, president and founder of RDLB Inc., speaking at Heavy Duty Aftermarket Dialogue in Las Vegas.
TEA is a measure developed by MacKay and Co. to measure the part of the Gross Domestic Product that spends time in trucks.
Before looking ahead to what the trucking industry can expect for 2018, Dieli took a look back to what he had forecast for trucking at last year’s meeting.
His three keys takeaways from the 2017 meeting were:
· The expansion phase was likely to continue through 2017
· Domestic events, mainly fiscal policy, would have the biggest effect on TEA in 2017
· The composition of TEA growth would continue to change
He was cautious a year ago about investment, exports and government — three of the five elements that make up TEA, the other two being consumption and imports — but by the end of the year, government spending was the only area of caution.
Dieli uses a tool called the Enhanced Aggregate Spread to help him forecast market conditions. At the end of the third quarter of 2017 (the latest period for which figures are available), all areas of TEA have shown growth, aided by truckable investment and truckable exports, but truckable consumption was the true driver of the growth. He expects this to continue with employment continuing to rise.
Looking forward, Dieli said TEA is continuing to follow the path normally associated with the expansion phases of the economic cycle.
Dieli’s forecast model shows that for 2018, expansion will continue and TEA growth will remain positive. The pace of recent capital spending has accelerated and businesses are placing orders and making purchases.
Demand for exports should continue and imports likely will continue to expand as a result of consumption and investment.
As for government, he says, “Considerable uncertainty remains at all levels of governments. The drag on TEA seems likely to persist this year.”
Concluding his remarks, Dieli made these predictions:
· 2018 looks to be another good year for TEA
· The effects of the changes to the tax law will take a while to be seen, but the net impact is expected to be favorable.