This February, the U.S. economy entered a recession. The economy hit rock bottom in late April and May, however, some economists are not expecting an elastic return to a pre-pandemic economy. This means there won’t be a V-shaped recovery where the economy drops suddenly, only to shoot back up just as quickly. Economists are expecting a gradual increase: think of a Nike® swoosh-shaped climb. We are already seeing gradual progress with the 2.5 million jobs added in the last month, however that number compared to the 20 million jobs lost is still only a small chip away at the unemployment rate.
Another reason we are expecting a slow recovery is that many businesses are still in the process of returning to operations and are not near operating at 100% capacity. Getting 20 million people back to work will be a lengthy process, especially with many still taking precautions due to health concerns. This makes a rapid return to our previous economic prosperity highly unlikely. The multi trillion-dollar stimulus kept the country from diving deeper into a recession and possibly even prevented a depression. Evidence reveals that we already hit bottom, as the stimulus money that was pumped back into the economy hopefully alleviated the possibility of a continuous downward spiral.
The speed of economic recovery will depend on how well the medical and scientific industries combat the coronavirus, and the ultimate key is finding a vaccine. Forecasts predict that it could take 12 to 18 months for the economy to fully recover to pre-pandemic levels. It is believed that we hit our lowest point a few weeks ago and will begin a steady recovery.
A Trucking Freight Recovery Index has been created with 100 representing pre-pandemic levels. As of the week of June 29, the index was sitting around 90 as a result of a small spike the week before. Being above 80 is considered the “full recovery phase”. The index hit its low of 28.9 on April 17. The dry van sector has performed the best of the three sectors with flatbeds being second and refrigerated being the slowest to recover.
As we move forward, we can confidently expect the industry to continue its upward trend, even if it feels slow. As people continue to increasingly venture out of their homes more, we can also expect to see an increase in demand.
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Public Relations & Marketing Intern, C.L. Services