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IHS Consulting IHS Consulting
U.S. Economic OutlookU.S. Economic Outlook
FHWA Talking Freight SeminarFHWA Talking Freight Seminar
Steve Owens
Consultant, Commodity Flow Analysis & Forecasting
February 16, 2011
Copyright © 2011 IHS, Inc. All Rights Reserved. 2
IHS is The Source for Critical Information and Insight™
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content, insight and expertise in key areas shaping today’s
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Copyright © 2011 IHS, Inc. All Rights Reserved. 3
The U.S. Economic Expansion Gains Momentum
Growth picked up considerably in Q4 2010 GDP growth expected at 4% in Q1 2011
Employment creation continues to lag the recovery Jobs growth will spark recovery in spending, housing markets eventually
Consumer confidence measures hold steady or move up
Business equipment investment, exports, and durables consumption will lead U.S. growth
Nonresidential construction will begin to recover in 2012
Excess capacity will keep inflation subdued, and monetary policy will stay accommodative through 2011
Copyright © 2011 IHS, Inc. All Rights Reserved. 4
-8
-6
-4
-2
0
2
4
6
8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
3
4
5
6
7
8
9
10
11
Real GDP (Left scale) Unemployment Rate (Right scale)
(Annual percent change) (Percent)
A Growing U.S. Economy Will Bring Down The Unemployment Rate
Copyright © 2011 IHS, Inc. All Rights Reserved. 5
-25
-20
-15
-10
-5
0
5
10
15
2000 2002 2004 2006 2008 2010 2012
All Manufacturing
(Percent change, annual rate)
Manufacturing Production Growth Is Moderating With The End Of The Inventory Cycle
Copyright © 2011 IHS, Inc. All Rights Reserved. 6
2009 2010 2011 2012
All Manufacturing -10.9 6.6 5.8 4.4
Motor Vehicles & Parts -24.8 24.7 15.0 9.0
Computers & Electronics -8.2 13.6 14.7 15.1
Elec. Equip. & Appliances -12.7 5.1 6.2 4.0
Textiles -14.9 1.5 -0.8 1.0
Apparel -18.1 0.6 -2.3 -6.5
Furniture -19.4 -1.1 4.1 6.5
Chemicals -3.5 3.8 3.4 2.6
(Percent change)
U.S. Industrial Production Growth By Sector
Copyright © 2011 IHS, Inc. All Rights Reserved. 7
(Dollars/barrel, WTI) (Dollars/million Btu, Henry Hub)
Crude Oil and Natural Gas Prices Have Diverged
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0 3 6 9 12 15 18
Industrial Materials
Foods & Feeds
Consumer Goods
Autos & Parts
Aircraft
Other Capital Equipment
Computer Equipment
2005-10 2010-15
+
(Annual percent change, 2005-dollar basis)
Capital Goods Lead Growth in Real Exports
Copyright © 2011 IHS, Inc. All Rights Reserved. 9
U.S. International Trading Partners Are Shifting
Source: Global Insight World Trade Service
(Exports, Real U.S. dollars)
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Containerized Trade Forecast by US Coast (TEUs)
Copyright © 2011 IHS, Inc. All Rights Reserved. 11
Panama Canal Expansion
Many U.S. Ports must make investments to take advantage of New Panamax
Clearance Depth Landside infrastructure
The new lock’s chambers designed to be 1,400 ft long by 180 ft wide, and 60 ft deep
~4,800 TEU to ~12,500 TEU Construction scheduled to be completed in 2014
Copyright © 2011 IHS, Inc. All Rights Reserved. 12
Signs of Life in Transportation Sector
IHS Consulting
ATA Index measuring For-Hire Truck Tonnage at highest level since September 2008
Class 8 heavy truck orders rose 320% year over year
2010 saw 14.7% more intermodal shipments than 2009: 13.4 million units
Monthly carloads in January 2011 increased 8% compared with January 2010
January import cargo volume at major U.S. container ports up 8% year over year
North American air cargo increased 21.8% from 2009 to 2010
Copyright © 2011 IHS, Inc. All Rights Reserved. 13
Growth In Domestic Freight Tonnage
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Truck Miles Traveled & State and Local Highway Investment
•2010 saw 24 times more car and light truck miles than freight carrying truck miles
Copyright © 2011 IHS, Inc. All Rights Reserved. 15
Transportation Rate Recovery Varies by Mode
IHS Consulting
Rail Rate Growth Positive but Slowing
Trucking Rate Recovery Just Beginning
Deep sea freight rates have stalled after a year of robust growth
Domestic water rates vary with inland faring better than Great Lakes.
Copyright © 2011 IHS, Inc. All Rights Reserved. 16
The Road Ahead
• The economic recovery is now on a self-sustaining course
• The risk of back-to-back recessions has diminished
• Business equipment investment, exports, consumer durables, and housing construction will drive the expansion
• Excess capacity will keep wage and price inflation down
• Weaker dollar should encourage foreign export gains
• Federal transportation investment likely to be limited
