AP Photo/Carolyn Kaster
- Aaron Terrazas is the director of economic research at Convoy, a digital freight network.
- He says that, for the millions of truckers around the United States, the current recession is old news — there’s been a freight recession since 2018.
- It’s important to remember the real impact of a recession: the disruptive effect it has on workers’ lives.
- Truckers in the freight recession shouldn’t just be forgotten or lumped in with a nationwide average.
- Visit Business Insider’s homepage for more stories.
The longest expansion in US history has come to an end. It will still be a while before the arbiter of US economic expansions and contractions — the economists who make up the National Bureau of Economic Research’s Business Cycle Dating Committee — is able to fully assess the data and make it official, but that feels like a technicality. In many ways, we’ve lost our northstar for why recessions matter: We’ve become too focused on the details and lost sight of the people behind the mind-numbing statistics that we see with each passing week.
For the nation’s millions of truckers, this recession is old news. It’s one reason why truckers rolled into the streets of Washington, D.C. earlier this month in protest, and have gathered for smaller protests in a handful of other cities in recent weeks.
It’s often said that freight provides a window onto the economy, but it certainly didn’t feel like that last year. While American consumers were indulging in a spending spree that propped up the economy in 2019 against industrial-sector headwinds, the freight industry was confronting a sustained contraction in demand. The trade war, a year of disastrous weather that pummeled American agriculture, and softness in emerging economies all played their part.
Courtesy of Convoy
In trucking, we’ve been talking about a “freight recession” that began in late 2018. Truckers invested in new trucks and training new drivers in response to record-high prices in 2017 and early 2018, but then demand fell and so did the rates that truckers charge shippers to move their goods. But hardly anyone outside of freight noticed. There was no panicked intervention by policymakers and few headlines. It wasn’t the first time that a major sector of the US economy stumbled against the backdrop of a broader expansion.
As economists and as a country, we’ve lost our northstar for why recessions matter. We’ve become too focused on the details: Whether or not the contraction lasts precisely a minimum of two quarters, whether or not the change in economic activity is precisely below zero, whether or not precisely the right metrics are pointing to the same conclusion.
There was a jobless recovery in the early 2000s, a wageless recovery from 2010 to 2013, a regional recession in oil producing states from 2014 to 2016, and a freight recession since late 2018. The collapse of the late-1990s/early-2000s tech bubble — a sector-specific contraction like the recent freight recession — spilled over to the broader economy, but the arguably deeper and longer manufacturing-sector struggles later in the decade did not.
If we were to look at each state’s economy in isolation — and apply one common approach used to identify turns in the business cycle — Michigan would have spent nearly six years during the first decade of the 21st century in recession, with Kentucky and Illinois not far behind. Meanwhile, Georgia, Nebraska, and Arkansas would have each spent only a few months of the decade in recession.
Courtesy of Convoy
With so many asterisks and footnotes, the line in the sand between official economic expansions and contractions begins to blur. As recessions have become less frequent over the past half-century, it increasingly feels like the whole idea of a recession has lost its meaning.
Part of the blame lies with the data. Aggregate statistics can hide more stories than they tell, and in an increasingly diverse and polarized economy, the canonical nationwide metrics used to judge the state of the business cycle risk glossing over gaping differences across geographic regions and across sectors of the economy.
More than anything, recessions matter because of the scale of disruption they cause for people’s lives — the human suffering that they cause. If that is the northstar, then the booms and busts beneath the headline metrics matter a lot more.
The United States economy may have officially entered recession as the COVID-19 pandemic put economic activity on pause in March, and the depth of this crisis is certainly unparalleled in recent memory. But many small- and medium-sized trucking companies and independent truckers were already coming off a tough year even before the pandemic.
The freight recession of the past year-and-a-half or Michigan’s lost decade in the early 2000s cannot just be outliers that get papered over in a nationwide average; they are people whose lives have been disrupted for quite some time and they are the headlines that also require our collective attention.
Aaron Terrazas is Director of Economic Research at Convoy, a digital freight network that uses data and technology to more efficiently match shippers with independent truckload carriers.