How the Economy Affects Transportation

EconomyAs one can assume, the strength of the economy and the current market conditions are closely related.  In order to get a feel of the current state of the economy, one would take a look at several different macroeconomic factors.  Some of these factors include interest rate announcements, Gross Domestic Product, Consumer Price Index, housing starts, jobless claims, and government fiscal and monetary policy. With an understanding of each indicator, you would be able to get an idea of the strength of the economy.

There are several market conditions that affect the transportation industry. Specific market trends, such as seasonality have a large impact on the industry. During the fourth quarter, October through December, we see an increase in demand for transportation services.  This is logical, as many companies prepare for Black Friday and the holiday shopping season. Also, it is important to note that transportation made up 9.5% of GDP in 2013. This is a large share and could be used as an estimate of the direction of the transportation industry. Unfortunately, even with the high percentage of GDP, the transportation industry struggles from a driver shortage.  Within the next five years, the majority of the ‘baby boomers’ will be ready to retire, if they haven’t done so already.  That means many quality drivers will be retiring, no longer offering their expertise to their clients. The transportation industry is having trouble finding new talent to fill these positions. While this problem is one that many industries face, it has affected transportation greatly.

Looking forward, data suggests that the New Year will offer a solid economy for the United States; based on an improving unemployment rate and job market, positive stock market investments and increases in gross domestic product. Of course, stay educated on the global markets, oil prices and other economic conditions that can certainly affect the economy and transportation.