John’s Blog 5-4-11

Proving Our Mettle, Earning Our Stripes  

Dear Friends, 

Reading the economic tea leaves is always tricky, but overall the news continues to be good. Fuel prices are still the wild card factor that could hamper the overall recovery. 

The consumer price index was up 0.5% in March, according to the Labor Department – on the high side, thanks to food and fuel prices, but steady, matching February’s rate. Consumers are no doubt feeling the pressure, but other key measurements are still demonstrating growth. 

The Institute for Supply Management’s factory index showed growth moderating in April to a reading of 60.4, down a bit from March’s 61.2.  Keep in mind, though, that the March number was the highest peak the index has hit since 2004, so a bit of slacking off is no cause for alarm – especially considering that April’s results showed growth for the eighth consecutive month (any number over 50 for the index signifies growth). The April result also beat most analysts’ predictions.   

Economists are wavering on what the GDP will be this year, but with strong freight volumes and manufacturers still hitting high volumes, I continue to be optimistic about 2011 being a modest recovery year, hitting 3.5% GDP growth. After all, factory orders were up by 3% in March – also well ahead of forecasts – for the fifth straight month of increased orders. Durable goods orders were up 2.9%.  The Federal Reserve said that industrial production grew 0.8% in March. All of these indicators show positive growth and when coupled with positive consumer confidence they tell a compelling story. 

Consumer confidence will be key. The Conference Board said consumer confidence came it at an April 65.4 reading, up from 63.8 in March. Even as the economy continues to hum and beat expectations, though, too much pain at the pump still could threaten overall consumer spending. 

Motor carriers continue to report positive earnings, with a few exceptions.  The Cass freight index said that shipments in March were up 14% year over year. Intermodal and boxcar service continues to show growth, with the railroads all reporting solid profits. 

At Wagner we are well into the second quarter and continue to see strength in our business. Transportation is very active as companies scramble to cover loads, but no matter how busy it gets, the Wagner team is committed to delivering exceptional service. 

Please let me know if we may help you in transportation, fulfillment or distribution warehousing. 

Have a great day! 

John Wagner Jr