John’s Blog

5-24-10

Dear Friends,

The big economic news from last week included a Commerce Department report explaining that existing home sales rose 5.8% for the highest level since October 2008. The National Association of Realtors confirmed this by stating that the 672,000 homes sold was the highest level in five months.

The Labor Department said the Producers Price index increased 0.1% in April after an increase of 0.7% gain in March. This index measures prices paid to manufacturers, agriculture, and others and excludes energy and food. The PPI is a good measure showing how strong the markets are for goods which affects transportation demand.

The Labor Department also reported that the Consumer Price Index fell 0.1% in April reflecting a slight decline in costs for goods and services. Note that the CPI is influenced by the services sector which makes up 60% of the index.

President Felipe Calderon was in Washington last week to meet President Obama and one of the topics of conversation was the NAFTA crossborder trucking issue. This has been a topic on President Calderon’s mind for a long time. When I attended a mission to meet with the President at Los Pinos (the Mexican version of the White House) with Governor Blunt of Missouri it was a thorn in his side in 2007.

President Calderon made it clear that the US must live up to its commitment under NAFTA which was followed by the Bush era experiment in cross border trucking. This was killed by an outrage from the Teamsters and OIDA and others who feared for the safety of US highways. The rest of the story is that when the project was killed in March 2009, Mexico retaliated slapping almost $2.4 billion dollars of tariffs on US products.

US Transportation Secretary Ray LaHood has been saying for months that a solution is forthcoming so we will be watching to see how this ultimately plays out.

Have a great week!

John