Perhaps it goes without saying that the relationship between consumer spending, retail spending, and freight volumes seems intuitive, but is actually unclear. After all, consumer spending fell 13.6% in April compared to the month prior, and is expected to be negative on a year-over-year basis in May, but truckload volumes are up.
The particular features of the coronavirus-induced economic crisis also play a role in how freight volumes are affected. In 2008-9, a financial crisis froze credit and business investment, destroyed jobs and asset prices, and crashed consumer spending and freight volumes. But the coronavirus pandemic was marked by an artificial suppression of consumer activity, especially in services, that was accompanied by a vast and quickly deployed program of coordinated monetary and fiscal stimulus.
The effect has been pronounced job destruction, especially in services, and a mix shift in consumer spending from services (travel, beauty, entertainment, sports) to goods. A further mix shift from department stores and restaurants to discount stores and grocery took place. Most importantly, those shifts in consumer behavior now appear to be slowly normalizing.
In this report, we discuss the relationship between consumer behavior and the financial performance of truckload carriers, the current state of consumer and retail spending, and mobility data as an indicator of consumer behavior.
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