Predicting the Unpredictable: Attempting to plot out the economic recovery: The economic collapse that happened and still continuing by the Covid-19 pandemic was so unprecedented. It’s difficult to predict what s going too happened for the future economy.
But two such economists, Caterpillar and Bill Witte, chief economist for industry forecaster FTR and Laura Speake, chief economist, energy and transportation, both indicated it will be 2022 before the U.S. economy fully recovers to pre-pandemic levels. And also they said that many businesses will never recover at all.
“Coming out of the other end, whenever that is, I think there’s going to be some real permanent damage to the economy,” Witte said, noting employment may never equal pre-pandemic levels. “That’s not the most optimistic forecast I’ve ever made.”
Predicting the future of our national economy isn’t easy. “There are no past patterns for an economy that just experienced a 30% drop,” Witte noted. He also said that “The economy will be driven by how the virus behaves, and policy response.”
Covid-19 is another natural disaster
Speake said that “When we came into this year, we felt very differently about where we thought we were going to be, to what has occurred.” At the beginning of the 2020 year, U.S. employment was at record levels, GDP was expected to grow, the Phase 1 trade deal was reached with China, and oil prices were strong enough to support U.S. shale growth. A complete growth estimated for the beginning of the 2020 year.
“There were lots of positives coming into the year,” said Speake. “By March, everything had changed, and changed quickly.”
Now, the economy in recession. The Witte compared it with the natural disaster.
“This is non-economic,” he said. “It’s more like a natural disaster that comes out of the blue, hits the economy, and when you have an area that’s hit by a natural disaster it’s really whacked.”
Trucking feels the pain
The trucking industry has a great impact than the broader economy, pointed out Clay Slaughter, FTR’s chief strategy officer. When U.S. GDP plunged 32.9% in the second quarter, the goods transport sector dropped 42.2%. “We have a bigger hole to dig out of,” Slaughter said.
But, it is happy to say that the trucking industry digging out quite rapidly. FTR’s Truck Freight Recovery Index shows that trucking has already emerged from the full recovery phase. Also, he said thanks to rising freight volumes and rates.
The recovery in the trucking industry is not even spread among all segments. The rail industry still stuck in the restart phase.
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