“Only good news is that the number was still positive despite the high number of cancellations.”
By Wolf Richter for WOLF STREET.
Orders for heavy trucks in March collapsed by 52% from the already dreadfully low levels a year ago to 7,400 trucks, the lowest since 2010, driven by cancellations of existing orders “due to the sharp and sudden downturn in economic conditions,” according to preliminary estimates by FTR Transportation Intelligence. And so COVID-19 spirals through the economy:
“It is expected that most fleets will pause their replacement cycles due to the crisis,” said FTR vice president commercial vehicles Don Ake. “Large fleets that have immediate needs and the financial resources will continue to place modest orders. Additionally, smaller fleets may tap into the used truck market for their short-term needs to reduce the financial risk.”
“The second quarter will be tough on the Class 8 market, and the third quarter is still highly uncertain,” Ake said.
“The only good news here is that the number was still positive despite the high number of expected cancellations,” Ake said.
But the plunge in truck orders started 17 months ago, in late 2018, following a historic boom. This chart shows the change in orders in percentage terms, compared to the same month a year earlier. As you can see, COVID-19 hit just as fleets had started to increase their orders a tiny wee bit:
The historic boom in orders from late 2017 through the summer of 2018 was triggered as fleets responded to extraordinary demand for transportation services caused by companies wanting to front-run potential tariffs. By late 2018, the whole shebang came unglued, and fleets slashed their orders. Now comes COVID-19.
Over the past 12 months, Class-8 orders have dropped to 170,000 trucks in total, down 66% from the 12-month total at the peak through October 2018.
Starting last summer, truck makers implemented layoffs, with Navistar kicking off the trend. Kenworth and Freightliner announced layoffs in October. Mack Trucks got hit by a 12-day strike that idled 3,500 workers late last year, but in January, it announced layoffs due to the collapse in orders. Volvo Trucks announced layoffs in November.
So that was the scenario through February. In March, truck manufacturers suspended production due to the virus.
Truck sales followed orders with a lag.
There is a long lag between “orders” to the manufacturer and when the manufacturer actually sells the truck to the dealer for inventory or to the fleet that had ordered it. When backlogs are huge, as they were in 2018, the lag between orders or sales can be very long; now that these backlogs have been eaten up, the lag is rather short.
So “sales” were high through much of 2019, fed by the order backlog from 2018. But late last year, sales got hit too. And in March, they plunged.
Combined sales of heavy trucks (Class 8, GVW over 33,000 pounds) and of medium-duty trucks (Classes 4-7, with GVWs from 14,000 to 33,000 pounds) plunged 49% from the peak late last year, according to data released by the Bureau of Economic Analysis, to a seasonally adjusted annual rate of 291,000 trucks (SAAR), meaning if sales continue at the March rate, total sales for the 12-month period would be 291,000 trucks). It was the lowest rate of sales since 2011.
The chart shows the weakness from October through February, followed by the lockdown-plunge in March. The plunge in March was likely just the initial reaction of the data to the lockdowns that started in mid-March:
Ironically, trucking has now split in two. The fleets that serve the supermarket supply chains are struggling to catch up with demand of widespread panic buying and hoarding. Supermarket chains have reported booming sales in March. And those products got there by truck. And trucks that serve the fulfillment infrastructure of ecommerce are busy, trying to catch up with online panic buying and a massive shift from brick-and-mortar retail of all kinds (now largely shut down) to online. And there may be other pockets with a lot of demand for trucking services.
As for the rest, demand for transportation services has withered. Fleets are trying to navigate this new environment. And preserving cash by culling and cancelling orders is one of the first steps to take.
This is how the Fed is loading up on Treasury securities, mortgage-backed securities, repos, “central bank liquidity swaps,” and “loans” to keep the Everything Bubble from imploding further. Read... $1.5 Trillion Helicopter Money for Wall Street in 3 Weeks of Fed Bailouts
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Any opinions on supply chains breaking down?
Manufacturing, mines and imports are all shut down all across the country and world.
How long until, let’s say a truck manufacturer/repair center, needs a a gear, bearing, bolt, washer, electrical cable, etc. and can’t get it?
Causing trucks to fall out of service.
Add in rail roads. Electric power plants. Water treatment. Refineries. Tire manufacturers. Etc.
It is all interconnected. Grocery stores and Amazon warehouses need the rest of the economy to function or they will shut down after a short while.
We certainly cannot do this forever. The goal is to get infection rates down to where critical cases don’t overwhelm the health care system, and buying time to ramp up the health care system to be able to meet demand. And this has to happen pretty soon.
It won’t.
Sadly, I strongly agree: we are going down in flames. Our economy may not be any where near the same for decades due to our current leadership’s continuing mistakes.
I would feel safer in a diving airplane with a drunk, but competent pilot than with our current, federal “leadership.” (The recent firing of the intelligence IG might later enable the elimination/concealment of evidence/whistleblowers of their negligence/incompetence.)
This will be the Katrina times fifty for the current administration of this country, because so many of their loyal state governors did not lock down or take enough steps to prevent this epidemic due to their misstatements: e.g., Florida and Louisiana have self inflicted, gut shot wounds from the spring break and Mardi Gras parties which their governors’ allowed, respectively. (Their foolish governors’ failures after those mistakes to do remedial, state-wide lock downs until too late mean that those states each probably have a huge, not fully known, currently-incubating epidemic.)
Hopefully, California may avoid the out of control peaks of coronavirus infections coming to other states. What will then happen? I predict that many persons from poorly governed (southern and midwestern) states which later have infection epidemics at rates rising out of control will flee to California and other states who have had competent governors.
I hope that the competent governors of California and other, well governed states find ways to quarantine and track those fleeing individuals running from the reckless governors’ southern and mid-western states. Since there is a constitutional right to move between the states, absent CDC action or presidential order, if I were governor of California, I would then try to figure out some legal way to have massive interstate transportation closures to prevent the fleeing infected from overwhelming California’s health care system: e.g., due to massive road work scheduled for the coming months, inadequate aviation fuel deliveries, etc.
The central government is asleep at the switch and will later just blame all others for its numerous mistakes like its long-ago predecessor did after FEMA’s “Browny” Katrina-relief–disaster, which governance disaster occurred for many days after the main, hurricane disaster. Thus, those state governors who have shown that they are wise are our only hope.
Nevertheless, our private health insurance health care system, which is the worst and most expensive among developed nations, will make this pandemic worse in the US than in any other developed nation. Remember that millions of persons residing in the US do not have health insurance nor any financial way to access medical care.
Those persons will fear being tested and ordered into quarantine, so they will be reservoirs of the coronavirus for many months to come. If re-infection is possible, they may be passing around the virus for months. If it is not, it may still be many months before herd immunity eventually causes this pandemic to burn out when all uninsured (and insured) have had and survived or been killed by this virus.
@Mike
Is there a financial instrument available where I can take the other side of your 4th paragraph like a put option?
Just like the Economic Impact Check
“The goal is to get infection rates down to where critical cases don’t overwhelm the health care system.”
So you get the infection rates down, in doing so keep the health care system from imploding, even manage to upgrade it and then start releasing people from lockdown to get the economy up and running again? Without a vaccine or cure won’t you be setting yourself up for a second wave, then a third and so on and so forth. Isn’t this starting to happen in China right now?
I know, it’s a “damned if you do, damned if you don’t” type of situation. My best guess is that at some point in the near future they will give some sort of cautious all clear signal and let the virus run its course. The alternative is just too horrible to contemplate. If the economic tissue decays, it will take the health system down anyway. So there’s that.
Cautious all clear? More like a limited increase in commerce with an increasing loss of Liberty. “Papers please“. Temperature checks everywhere, antibody certifications. Restaurants and suppliers are done. Weeks even days until the doors close for good.
Wolf can you explain this?
https://www.worldometers.info/coronavirus/
Why is say Thailand 8% for test-cases positive, but in USA its 20% positive for test cases? Does that mean that given a runny nose, USA people are 3 times as likely to be infected? Or as many say, that lots of USA people have been carriers all along?
Italy 20%, just like USA, can’t do China cuz they don’t publish test’s-done.
South Korea 2%, they gave a massive amount of tests some 455k, this tells that very few of the population is affected given the test’s were wide & random.
Spain a whopping 35% of those tested are positive, I think this is where USA is headed, was Spain perhaps also externally infected long before testing? Where huge amount of the population was already infected?
In the US, you can’t get tested unless you meet certain conditions. Once you meet all those conditions, you have a pretty good chance of being positive, and so the percentages are higher. If you tested everyone, the percentages would be lower. So comparing these percentages from country to country or city to city is meaningless because it all depends on who is allowed to get tested in each location.
Testing is getting ramped up, but there are shortages everywhere (the latest in California was swabs…).
HD, I agree. At some point they are going to have to let the illness run its course, or we’ll all starve to death.
If enough testing is available, the country will be able to move to a more limited, selective quarantine. Will the virus slow in the summer?
Maybe by mid summer, restaurants, manufacturing can cautiously open, with testing and maybe spacing. I think that is a best case scenario.
It is a shame that the current resident of the white house called covid 19 a democratic hoax in stead of taking action in january. All this could have been past or close to past this by now. This clown still will not listen to the experts. You can tell by the expression on the Drs face as trump says b s in front of him.
Wolf – or develop a treatment that is not a vaccine. It works for AIDS, no vaccine for that.
Serum antibody therapy will eventually kick in, but you have to have a lot of recovered patients willing to donate blood.
“CITIZEN!”.. “WHAT – IS – YOUR —- ‘GENOTYPE’!”
Wolf unrelated question,but always related. 701k job losses, 10000k people file for ei in last 2 weeks, who’s hiring? Am I missing something?
Curious,
It’s a timing difference. The report of initial claims for unemployment insurance is weekly and the timeliest. It picks this stuff up first. The jobs report is monthly. The surveys that went out to established the 701k job losses predated nearly all lockdowns. The surveys that are going out this month will reflect the lockdowns. So expect tens of millions of job losses in the next unemployment report. It’s going to be astoundingly horrible.
Some R&D technology companies are still actively hiring. I interviewed several candidates this week and am slated to do the same next week.
Just need internet and access to the company servers to do my work. Fortunate.
These jobs are a drop in the bucket though.
FedEx is hiring as is UPS. Since everyone is ordering online they’re having to ramp up heavily to meet the demands. Pay and benefits are good too. Not like some other industries, but good enough to get by in these perilous times. And it’s an essential element so it’ll continue to run.
Watch the video of Dr. Jay Batthacharya of Stanford questioning the conventional wisdom.
I prefer “Life Panels”. You can have life, you cannot.
Doesn’t explain the fact that our hospital systems are getting overwhelmed. Sure, the fatality rate *may* be the same but the severity level is not. Let’s see the rate of cases that need ventilators/intubation compared to the flu. Let’s see the average hospital stay duration coronavirus vs. flu. We will be at 10,000 deaths or close to it by the end of the weekend. And this is with all of these shutdown measures. What do you think that would be if we did nothing like we do with regards to the flu? I mean, it’s ok. We all are adjusting to this in our own way. but it seems to me that there is a subset of the population who is frightened and grasping at straws rather than fully accepting the new normal. You see the same sort of delusional denial with climate change skeptics. Hand picking one or two “experts” rather against an overwhelming majority of scientists. Yes, we’re massively undertesting. But there is not alternative at this point. You can’t just spit out hypotheticals like Dr. Jay and base your policy off of what could be. You deal with the hard data you have. People who think they are smarter than they actually are love to take contrarian views. Dunning-kruger abounds on sites like this, zero hedge, etc. It’s tiring. So feel free to live your life like normal. No one is stopping you. but don’t cry when you end up intubated for 20 days
Do we really have enough data?
That’s Dr. Jay’s point.
I’m underwhelmed by the organization and effort that the federal government is exhibiting. I guess when you downsize government to non functional so you can prove how dysfunctional it is, you win while the majority of us lose. This response may even make the Katrina response look good.
Oh, I know its the governor’s faults. They didn’t prepare for a Pandemic.
It’s a systemic failing at all levels. Everyone, on paper, has a pandemic flu plan. They’ve worked at it for decades. They started to apply it to COVID and discovered that having a plan isn’t the same thing as being able to execute the plan. Oh and COVID doesn’t behave quite like flu, so the plan had to be rewritten on the fly.
Bottom line is that the best helping hand you will ever find is not in government, not in the private sector, but on the end of your right arm (or left)!
I’ve regularly heard snippets of your president’s interventions on the daily press conferences and I can tell you this: this is absolutely not the man you should have at the helm when your country is facing such a crisis. The man is utterly self-absorbed, does not tolerate any criticism, lacks genuine empathy, takes everything personal and has a tendency to surround himself with useless cronies à la Kushner when he should shut up and listen to knowledgeable people like Fauci. He does not strike me as a stupid man, but he is definitely not the man to guide the US through this mess. For crises like these, ideally what you need is an Abraham Lincoln or a Franklin Roosevelt, seconded by a George C. Marshall. Hollow MAGA propaganda won’t cut it this time.
It has already started.
The Italian government exempted vehicle repair shops from the lockdown precisely to keep supply chains running.
But the problem is spare parts are drying up as a ton of automotive component manufacturers and warehouses have been shut down: now repair shops mostly function as recovery services.
Rental services have also been shut down, meaning if delivery vans break down the drivers cannot rent another one to keep on working.
Same thing about electricians and plumbers: they have been exempted from the lockdown but their vendors haven’t, so where do they get the parts they need? Most have shut down or simply take whatever jobs they can do with the parts at hand.
I won’t even get into the truly asinine stuff, such as shutting down factories manufacturing oxygen canisters and other critically needed stuff.
Does the government care? Not one tiny bit. For them it’s full lockdown until we get to zero cases for at least two weeks and then everybody can get back to work.
Yesterday we finally protested and asked for a “slow but steady” plan to get back to work a little at a time because that plan is not merely economic ruin for a lot of people but is just asking for troubles.
This morning there are police choppers in the air here, never seen them even during drug busts. Such a subtle message…
As I joked this morning I wouldn’t be too surprised if our government were the only one in the world to embellish data upwards to keep us locked down longer thn anybody else. The person I was talking to thought I was dead serious and said I was right.
That’s not a good sign.
In BC Canada there is a system in place and functioning okay for the trades you mentioned.
The parts suppliers package up what is ordered, and place it outside on the ground when the mechanic/owner calls in and says they are waiting outside. Same for plumbing and electrical wholesalers. I am a builder (mostly retired) and our local industry yard builds their orders for their own delivery trucks, or if someone calls in they’ll bring it to the locked gates on their own trucks and load up the customer’s if they stand back. I’m putting in for an order towards the end of the month and will just have it delivered to site.
Home Depot type stores still open to the public but practicing robust social distancing.
My brother-in-law is still working construction. They have a small crew (2 + the boss) and just work apart from each other. They are actually quite busy and have enough work for the year as other builders cancel or can’t make it. The work is custom new builds and/or renos.
My son is still employed doing maint in the Oil Sands. When working he lives at a friends home. They all practice distancing, on the job and at home.
Our ‘curve’ started to show a flat trend this week. Our Provincial lockdown has been in place for a good month now, and people are cooperating by staying at home. Our own driveway gates are locked and we won’t go to town for another 2-3 weeks. All parks and trails etc are closed and empty. People are staying home for the most part. There are no RVs on the road, and places where people used to squat in their RVs have been cleared out.
I just donated about 50 n95 masks to our local volunteer fire dept as their order is backlogged and they are now required to use them on calls. I’ve saved 10 or so for our family. Meanwhile, my American sister (age 70) is spending her days sewing masks for a local clinic and for family….pretty amazing for the most exceptional country in the……(use your own superlatives)__________. My sister, the Betsy Ross of surgical masks. Sad. She is very sad these days as she sews away.
I have government inspectors who will not venture OUTSIDE.
They are sitting at home. My work is deemed essential, so it actually makes work a little more enjoyable.
I don’t have wait, or schedule around inspections.
Never let a crisis go to waste. Set the prisoners lose, tell the citizens
you will not respond unless there is blood. And oh yea…we are tracking you…leave lock down and you will be in a cell that is not your home.
Density + Desease/virus = death.
If the phone calls continue, theres going to be a lot more priuses, tiny homes & tiny barns & organic farming happening in my area.
It was already getting that way with Chicago going the way of Baltimore. Now it will accelerate. Who knows maybe even a telsa will show up out here.
That tesla .. should it make an appearance, might be a prime candidate for some impromptu ‘stress testing’ .. considering that most of the mopes don’t have the kind enthusiasm, or $GREEN$ that exudes from the pores from likes of Elon & his merry band of tech fan-bros .. what with this multi-deflationary phlue goin around.
I would have thought you to be dead serious and it will be the case. Follow the money – and the sociopathy.
Same in Spain: very strict lock-down extended until the end of April, and more army units deployed in towns -they fear a rebellion against being caged.
Infections still rising by 4-5% per day, even if deaths are – perhaps – moderating very slightly; but day-to-day figures are not worth following really .
This is exactly why all those Preppers were wrong. Something always breaks and sometimes the replacement is defective. No matter how much some people wanted to disengage from the society, we really are all in this together.
Of course unless you want to live in the pre-industrial age.
Dismantling important parts of our government was a really bad idea. Putting in cronies to run what’s left just added insult to injury.
I don’t see how preppers were wrong. I don’t see how being prepared and self-reliant as much as possible as being a bad thing? I suspect more will be better prepared next time, if they get a shot at a next time that is.
Preppers, similar to long passage sailors, must have completely independent redundant systems ready to implement for every major function.
Some serious circumnavigators, or just folks sailing from Panama to Marquesas know to be ready to do things the old way when thousands of miles from any help. This to included no electronics or even electrics, etc.
Going out yesterday, 2nd time in 5 weeks, all pretty normal and calm in grocery and liquor store.
Calm down folks. This is serious, but will go away.
MC01 & Wolf, another report from the Italian front would be of interest to many of us.
2banana, here is one example of supply chain breakdown.
Hopefully RagingTexas will appreciate this in regard to his belief that healthcare should be for profit, and we should not allow not for profit healthcare:
“This is so important for everyone to understand. This explains why Governors say: I’m not getting the supplies I need – yet @POTUS says we are sending tons of supplies: It’s going from the federal govt to commercial distributors who then deliver to the highest bidder: states!”
2banana,
Here’s another example of why supply shortages are showing up:
ProPublica has several articles on how our vast network of hedge fund owned emergency rooms are cutting back staffing and work loads. Hospitals swamped with covid cases are complaining this is adding to their already high workload and hurting there efforts at response and healthcare.
Hedge funds in many cases need never pay more 15% federal income tax (think that went up a bit as the capital gains tax was slightly increased before it was cut to a permanently lowed level).
And to top it all off, these hedge funds are getting bailouts from Darth Powell.
Back to the trucking question. A good friend just exited the trucking industry a month earlier than he expected to (retire). His health is not great and he went out on a medical leave rather than risk the virus. He says truckers in general are in poor health due to sitting for long periods. Obesity and diabetes are common with the older drivers that make up the field. If this is a common mindset there could be even larger demand destruction of new truck sales as up to now additional drivers are hard to find.
2banana, here is one example of supply chain breakdown.
“This is so important for everyone to understand. This explains why Governors say: I’m not getting the supplies I need – yet the WH says we are sending tons of supplies: It’s going from the federal govt to commercial distributors who then deliver to the highest bidder: states.”
Places are still open and shipping and receiving but brokers are taking larger shares leaving guys like me sitting. I cant haul for 1.40 cpm. Not when u as a driver cant even get out the truck n go in and eat anymore . Truckers need to unite rite now and not take this assault.rite now is the best time to shut down go be home with your family’s who need you. Cause america dont need us out here. We get treated like dirt and now expected to work for nothing. Get real, shut down everyone gets to be home with there family’s. And get paid tell me again how this works that I should be told how to drive n how much time to work and oh now it’s for almost nothing.
Trucking rates and driver pay are low due to supply and demand.
An excess of trucks and drivers competing for the loads available.
I’ve been going to the northeast lately, because most drivers refuse to go. High demand of goods, shortage of drivers willing to go. Good rates on these loads also. Find your nitch, find the demand, and that means doing what others won’t do.
Next month/week, with so much manufacturing and retail shut down, there will be very few loads. Those that have a history and penchant for refusing loads that are unpleasant will be sitting stranded in some truckstop far from home, broke.
I personally hope that more drivers refuse loads to hotspots in fear of getting infected. So that, when they are complaining about low $1.40 per mile rates in your “safety and comfort zone”, I will say to the broker, yes, I can go there, but not for what you are offering.
I personally am disgusted with socialists whining that they want high pay but won’t;
Drive up north, on icy roads.
Drive to the bad towns.
good luck getting these hive mind insect slaves to even act in their own self-interest as they are so hopelessly controlled by bread and circus social engineering hammering them dopey by the psychopathic criminal parasite elites.
My brother works at a mine in winnamucca NV. He says mines in Nevada all open
Good analysis and timely article etc… just feels like it was written in the past already, such is the pace of collapse, likewise ‘share market does something unexpected…’ – yeah, who says we are even going to have a sharemarket in the near/mid term?
Ha, this headline made me chuckle. Great analysis as always, Wolf. Your accurate coverage of everything impacted by this crisis has become my go-to source for unbiased information.
Farmers can’t tell the cows to hold the milk until a truck is available to deliver. 30 thousand gallons of white go down the drain (again today) per farmer, because holding tanks are full. Farmer can’t take the loss, he sells off the herd for discount to butcher. Beef price falls. By 2021 demand rises but the herds are gone. Beef and milk price rise exponentially.
https://www.startribune.com/dairy-farmers-begin-to-flush-away-milk-due-to-coronavirus/569315472/
Isn’t part of the milk problem due to the issues with the packaging?
From what I have read, the commercial packaging lines are all but shut down due to the closed restaurants, schools, universities, commercial kitchens where they use the “bladder bag” dispensers (not sure that’s the right term, but they are 5 gallon bags with a tube on the bottom) not ordering milk.
They can’t ramp up the retail packaging because of the capital investment required to expand lines and the existing plants are running at full capacity.
I wish some enterprising individual would realize that a family can use a bladder bag. I used to get them in college and we kept them in the refrigerator outside the carton and simply clamped off the dispensing tube. From watching the behavior in the grocery stores, selling 5 gallon containers wouldn’t be much of a challenge (I’ve seen grocery carts full of gallon jugs until the quantity was limited) and would eliminate the dumping of milk, provide adequate product, and reduce the hoarding. If it’s a convenience issue, sell the large containers at a discount to the smaller containers. With money short, it could solve a lot of problems.
My trucking company here in Calif seems to be doing ok, this first quarter is ahead of last year. Peterbilt is open for parts and repair but one concern we have looking forward is tires since most are made in Asia. The load numbers are down maybe 20 percent, fuel is cheap and the hauling rates are on the cheap side, so far no problems for parts availability.
It’s worse than you think. A truck is not just a truck. Trucks are very specific and spec’d out for each particular job. so just because that Kenworth looks the same as that other Kenworth, they are spec’d completely differently (power, gearing, transmission, axles, tires, etc, etc, etc). So a truck that was ordered (or purchased a year or two ago) to do X is completely inappropriate to do Y. The flatbed hauling area has totally collapsed. (driven largely by oil and gas). Those trucks still have to be paid for, insurance (which is outrageous), drivers, etc. Rates are already collapsing (even for the supermarkets) because there’s too much supply of trucks needing to make their payments.
this is but the bare tip of the iceberg.
What would you expect? We are at risk of a depression. They were ordering more trucks in 2018. They do not need to trade them in every two years.
Agreed.
A wave of updates are coming in Ontario. Expect a sales bump in Ontario through the fall, if measures get tougher south of the border the government can force truckers into the dealers every few years.
Let’s all hope for a main street economy that comes back fast and strong.
Although the usual hamhanded government/Fed response happened, a weak dollar and wage-push inflation would be a healthy sign for the domestic/US economy.
From a policy point of view, it sure seems like the Federal Govt tried to ignite some inflation in the “real economy”.
This may have some good effects on the financial markets too- causing a bit more realist price discovery & pricing. Zero interest rates are a dysfunction.
A weak dollar isn’t happening anytime soon: the emergency swap lines can at most keep the premium in check, but that’s about it.
Companies and countries are hoarding US dollars and to a lesser extent euro and yen to pay for emergency supplies, from facemasks to urgently needed spare parts, and to build up a “rainy day fund”. The US dollar will remain relatively strong until more and more countries start emerging from the emergency and start selling part of their US dollars.
Regarding inflation: the Fed is fixated with their own version of it, which is runaway asset inflation. Real estate, stocks, securities etc.
CPI and Core PCE are just window dressing: they care relatively little about inflation in the real world as long as it doesn’t become a serious political issue.
There’s very little the Fed will be able to do about real world inflation when the US will emerge from the healthcare crisis. Take cars for example: BMW stopped their German production not because the government ordered them to do so but because they are literally swimming in unsold cars. When dealerships will open again who will want to buy a brand new 5-series? Expect a short period of aspirational pricing followed by massive fire sales to try and raise cash when buyers make themselves scarce. How can the Fed fix that? Simple: they cannot.
I won’t even get into stuff such as milk, orange juice and fresh vegetables and I wouldn’t touch the subject of health insurance with a 10ft pole. Prices will be all over the place and, again, there will be very little the Fed can do about it.
“There’s very little the Fed will be able to do about real world inflation when the US will emerge from the healthcare crisis.”
I think you mean “deflation” and I agree totally with your premise.
The US debt clock shows the US GDP being subtracted.
I always figured we would just stop adding to the GDP not subtract from
it as the clock is doing now.
George W,
I hope you understand that the Debt Clock is a joke. It’s algo driven. The actual US debt doesn’t change by the second. It changes when Treasury securities mature and are redeemed (debt goes down by that amount) and when new Treasury securities are issued (debt goes up by that amount).
For example:
Actual US gross national debt as of Friday per US Treasury Dept.: $23.833 trillion
Debt Clock as of now: $23.696 trillion
You see, the Debt Clock algo fell behind because there was a huge burst of Treasury issuance this week to fund the stimulus package, and the aglo didn’t see it because it’s programmed to add a certain amount of debt every second, which is of course a joke.
All other numbers on the Debt Clock are handled the same way, generated by an algo not reality. It’s just a joke. If you want the real data, get the real data.
It just quite for me 1 st week of March. Looks like the CARE act will help every one ,but sole proprietorship, pass thru. LLC corp. Help people with pat roll, they take helicopter money and hire people to do nothing, help the gov. jobless numbers. How long will they pay people to do nothing? Once again independent that operate responsible will be shafted. This will do to small business what the Farm aid did to farmers, continually living on public debt. and cheep grain prices. Bigger the corp, more debt, more gov, help.
A good question about how long they will pay people to do nothing. Seems the government has been paying many of their employees to do nothing (poor work results) for a long time. The higher up in government the more motion and less productivity.
Just wait until this is all over, we’re gonna see another boom when things ramp up back to normal.
“back to normal” may be beyond your lifetime, if ever. We’re (the US) still waiting for back to normal from 9/11/2001.
“Just wait until this is all over, we’re gonna see another boom when things ramp up back to normal.”
What will be the driver? Last time it was more and more debt. The debt built up during the last 10 yrs isn’t going away under the CARE act, just ignored until you get back on your feet?
What about all those leveraged loans? Junk bonds, low B rated bonds? Sub Prime auto loans… with no payments for months?
Where is the money going to come from to ramp up the old economy back to the old normal?
I’ll believe it when I see it!
Bottom line is that we are going into a severe economic contraction, and people are going to have a lot less money to buy things. That means they are going to need a lot less transportation, trucks, rail, and shipping.
The amount of money being destroyed because of this shutdown is enormous. It is being masked somewhat by corporations maxing out their revolving credit, but as time goes on and much of that credit is defaulted on, the impact is going to be huge. Smart people will see this for what it is and transition into survival mode, while people who allow their normalcy bias to influence their judgement will be victims.
One aspect of Fed policy since GFC is the muted recovery. Fed has suppressed economic growth (and inflation as is their mantra) with their policies. When Jim Rickards says ” There is no pent up demand” he means the service sector. The proposed bipartisan trillion dollar infrastructure bill never got off the ground. Despite spiraling deficits the economy looks as though it is being held hostage to fiscal restraint, and permanently low interest rates. Once the fog of GFC lifts, the real economy should improve, and it will hugely destructive to the financially engineered asset system we currently have. Watching Wolf’s inside reads on trucking and housing should be very valuable tools.
Off topic. Went to Farmers Market this morning. More people and vendors wearing masks, but many still are not. Stopped at the specialty grocer on the way home. Plenty of inventory, lots of fresh fruits and veggies, no shortages. Workers all had masks. Odd thing, in terms of Hispanic couples, some Latina women had masks but very few Latinos. I don’t understand why people wont wear gloves and masks?
I have had no new orders in a couple of weeks; my last job was cancelled yesterday for some unknown reason. I have bid on an assignment, but my bid was double the next highest bid, so … Being frugal, F&C home and debt free sure makes things easier… My life has not changed all taht much YET. I rarely eat out. I had a great month last month, but I hate the idea of running into the red this month… Oddly, I am enjoying taking longer time to do assignments and not minding having a day or two b/w jobs. I am holding off on buying anything until the sale prices reflect deeper discounts and free shipping.
This will lead to a return to thrift and the eternal growth model will contract. I am re-startng the garden this month. We used to grow all kinds of veggies, can them and then use them for many of our meals. I have missed that.
No masks at the amish stores. And we are doing a poor job at “social distancing”. But no problem finding whats necessary. They may not have organic pine cone milk…but we will get by.
I hope we are let out on parole soon. Not sure how often we will need to check with our parole agent….I mean health dept.
But I do hope this ends soon. Our months of bleeding cash are the winter months. By late summer we have better generated 75+% of our revenue. Surprising to this point, very few cancellations & new jobs have been coming in. We will see how long it lasts.
Here in Seattle, drove by our biggest Central Park, Green Lake, last Tuesday and it looked like a busy Saturday afternoon. Lots of healthy athletic people snuggling in the name of exercising. And it was a cold April day in the mid-forties.
Not a mask to be seen. Droves of people walking in each direction right through the middle of each others Covid-droplets.
Like I suspected, it was announced today by several NY hospitals that are taking CAT scans on incoming patients, who are coming in for other issues – broken bones, car accidents etc. ALL OF THEM are showing damage to their lungs from the SARS part of the Covid virus.
We ALL have this or we all will have this soon.
When it gets nice around here at the end of the week, at least gets into the 60’s, the permanent party that is West-coast secular America will BE ON, like Donkey Kong!
Party On!
Remember in high-minded Seattle we do just enough to make ourselves feel better, and hence look down upon, the rest of the unwashed Red-state masses.
Lots of great discussion here. Thanks to everyone for their thoughts and Wolf for providing this platform to everyone and the great and thoughtful fodder. I’m afraid this is going to be a long grind (years) down to a ‘new normal’ which isn’t going to look anything like a ‘normal’, from the point of view of the Western standard of living. As ‘Wisdom Seeker’ said, it’s a systemic failing at all levels but I’d take that to another level. It’s a systemic failing of capitalism, period. Before you rush to call me a ‘socialist’, which I’m not, understand that the extreme, crony, predatory variety of capitalism that exists in the U.S. is a perfectly acceptable form of capitalism. ‘Acceptable’ from the point of capitalism as a system itself, not acceptable of course from a moral perspective. Where profit is the primary motive in capitalism, this state of affairs was entirely predictable and even expected. What financial incentive does a company like United, Anthem, Aetna, Cigna etc. have to keep a stockpile of masks, ventilators and other pandemic-fighting essentials? None. They never had that incentive and they never will. When healthcare is a for-profit industry, the focus is on the ‘profit’ part as it should be if you’re true to your character as a profit-making, i.e. corporate entity. Companies do stock buybacks for the same reason, to enrich the shareholders and the caretakers (read ‘executives’) of the company. That’s what you’d expect them to do if they’re true to fiber. It can be argued that their myopic view of short-term profits in doing buybacks may be detrimental to the long-term profit-making ability of the company but who says capitalism has to do with long-term profit making only?
It is precisely out of such naked excesses of capitalism that socialism was born and we’ve oscillated back and forth as a race since then. A *lot* more people are going to be feeling the colloquial ‘bern’ in the coming weeks, months and years, that much is certain. We’re looking down the barrel of another epic fight between ideologies and systems, in our lifetimes. It will come, even if there’s a brief respite. That’s because greed (as the primary driver of capitalism) and justice/equality (as the primary driver of socialism) are on opposite ends of the spectrum of human/moral values. There’s never reconciliation between such diagonally opposed motives, only temporary truces.
Deer-outstanding.
May we all find a better day.
One item of good news for trucking: cheap fuel for a while. The Trump ‘deal’ to get a truce in the oil price has already collapsed.
‘As an immediate result, the OPEC+ (or R-OPEC) meeting scheduled for Monday 6 has been delayed as Riyadh and Moscow have discovered a new reason to feud: arguing over who’s to blame for the collapse in oil prices.’
Not that a deal ever existed or that Trump’s claim of a 10 mbpd cut wasn’t considered impossible by all analysts…but still a pretty short headline head fake.
Thank you for bringing up HAPPY TALK!
Americans can’t handle the TRUTH.
Ventilator death rates in NY and Italy are higher than 50%, young or old.
Corporations and governments are infested with HAPPY TALKERS!
LYING to each other, LYING to everyone. TV is the worst. CBS anchorwoman almost melted down over the number of deaths over 100,000, screeching and whining, last night.
We won’t get out of this mess because we don’t have enough Andrew Cuomos.
We want DJT, LYING out of both sides of his mouth. That’s what we are used to.
The way I see it, it has very little to do with the facts of our current situation with covid-19, and more to do with most traditional truck drivers/ owner operators really don’t want to use the ball&chain ELD’s. I for one will NEVER buy another new truck just to keep driving. I have bought 4 new trucks my last being a 2000 model, anything newer requires me to use an electric Logging/tracking system. Looking at your own data you can see the down spikes in sales/orders. Has NOTHING to do with our current administration, it was put in place under the previous administration.
Haters will hate, idiot’s will follow the haters!
I don’t see ELD as being all bad. The DOT system has a number of options as the driver approaches the limits, and there should be an app to help the driver figure it out. If you drive over the scales with an ELD equipped model, you green light, and if not you pull over for inspection.
Maybe they should develop an “APP” that helps you to think for yourself, or an “APP” that gets your freaking food, (APP)clothing,(APP) gas, (APP)beer, toothpaste, (APP)batteries, phone chargers, pencils, APP, APP, APP…… to you. Can’t you people do anything without a freakin “APP” ? I don’t need or want to be tracked like a criminal. I’m doing this for the same reason you go to work every day, $$$$$. The love of my industry and profession has long been forgotten.
The leftovers from the previous leftist crap will continue to ooze out of the sewers for many years to come my dear, wake up and smell the maple nut crunch!
Hey Glo-plug, read the freaking article, it’s about the GD new truck orders, NOT the present administration. I NEVER said I love this president or hated any previous one. Get off your damn soapbox and look at the facts… If you want me to go down the line and criticize every president we’ve ever had and list the good & bad each has done, THAT’S an interesting idea for another story. But that’s NOT what this story was about.
“If you like your options you currently have, you can keep them”. Wow, that sounds uncomfortably familiar!
Hey, I have an idea for everyone, read this story backwards, you know, kinda like most people think. A little bit like reverse engineering, or some other culture that reads and writes in a way unfamiliar to us because most of us refuse to educate ourselves about the world and how many other countries people have grown increasingly sick of us, and find out how much they really don’t care about what Americans do as long as they stay away from their own people. It was all just a big experiment anyway, right?
good