TO HEAR Democratic presidential candidate John Kerry tell it, the US economy is in the tank and a majority of the people in this country are unemployed. Nothing could be further from the truth.
The latest figures show solid economic growth in the United States. Through the first half of the year, the economy grew at an annual rate of 3.3%, and business spending is overtaking consumer purchases as a driving force. Treasury Secretary John Snow said recently that the fundamentals of the economy are solid and the country is in a period of rising prosperity and strong growth.
The economic growth certainly is evident in many of the industries served by tank truck carriers and storage terminals. Chemical shipments rose sharply through the first half of 2004, and capacity utilization for chemical manufacturing topped 75%.
Petroleum hauling also has kept carriers busy despite crude oil prices that now have hit $50 a barrel. Higher crude prices aside, demand for refined products is so strong that many refineries in this country are being run at extraordinarily high levels of capacity.
Construction spending surged in August to the highest level on record, generating a tremendous volume of cement, asphalt, and other building materials shipments. The Commerce Department reports that the value of buildings put in place stands at a seasonally adjusted annual rate of $1.02 trillion.
Tank trucking, and the transportation sector as a whole, is running flat out to keep up with shipper demand. Through August, truck tonnage was up 7.2% compared with the same period in 2003. Rail freight — counting just carload shipments — was up 10.8%, and intermodal shipment growth topped 8%.
The only reason these numbers aren't higher is that the entire transportation section is bumping up against capacity constraints. Truck fleets have very little idle equipment at this point, and many of the railroads are short of locomotives.
The biggest shortage, though, is employees. With an unemployment rate of just 5.4%, companies throughout the transportation and logistics sector are having an incredibly difficult time attracting new workers. Let's face it; the current unemployment rate means 94.6% of the people who want a job have one. Based on the theory that 4% unemployment really equates to full employment, just 1.4% of the people in the United States are looking for jobs.
The situation is only going to worsen over the next 15 years or so. Some economists are forecasting a shortage of 10 million workers for America by 2020.
The current shortage of truck drivers has made turnover a bigger problem. The industrywide turnover rate for truckload drivers climbed to 116% on an annualized basis in the second quarter of 2004, according to the American Trucking Associations. The shortage is so acute that one of the ten largest tank truck carriers announced a special campaign earlier this year to hire 150 new drivers. The carrier even offered special sign-on bonuses.
Locomotive engineers are in short supply, and that is contributing to significant delays in chemical shipments. The shortage probably won't ease before 2005, because it takes six months to train a locomotive engineer.
All of this brings us back to the beginning of the editorial. It's ludicrous to claim that the US economy is in bad shape and is performing poorly. Certainly, there are economic soft spots, but they are just a small part of the overall picture. But economic conditions in this country are far better than Sen Kerry and the Democrats would have us believe.