The U.S. economy followed two slightly negative quarters in 2022 with two quarters of solid growth, but that expansion of the broader economy did little to support freight demand, according to a report from the transportation analyst firm FTR.
By the numbers, strong inventory investment and consumer spending trends pushed the nation’s real gross domestic product (GDP) in the fourth quarter to rise 2.9% quarter over quarter on a seasonally adjusted annualized basis, according to the initial estimate from the Bureau of Economic Analysis. That result was only slightly weaker than the country’s 3.2% gain in the third quarter.
Despite those robust results, the portion of the economy linked specifically to freight transportation – what FTR calls the GDP Goods Transport Sector (GTS) – dipped 1% annualized for its third straight quarterly decline. The only upside of that result was that the weakness is decelerating, following even bigger drops of 4% in Q2 and 3% in Q3, FTR said. Looking into the future, FTR’s outlook is for little to no growth through the third quarter of 2023.
One reason that the freight transportation sector missed the boat on the nation’s positive economics was that two soft spots in overall U.S. performance last quarter—residential investment and exports—had an outsized impact on freight demand. Another reason was that the rise in consumer spending was far stronger on services than on goods, so it didn’t generate much volume of physical inventory for trucks to move.
An additional negative for transportation was a slight increase in the national average price of diesel, which rose 8 cents to $4.604 a gallon during the week ended January 23. While the increase was not especially large compared to weekly gains in many weeks since Russia's invasion of Ukraine, it was the largest since mid-October, FTR said.
