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Economists Say Second-Half Recession Possible, Southern-Border Trucking Demand May Rise, Construction Employment Rises

Economists Say Second-Half Recession Possible, Southern-Border Trucking Demand May Rise, Construction Employment Rises

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Economists Say Second-Half Recession Possible

The U.S. economy is expected to weather recent crises including the failure of some regional banks and a debate over raising the federal debt ceiling, though a survey of economists predicts a recession could still hit in late 2023 or in the next 12 months.

The National Association for Business Economics, which has been surveying its member economists, analysts and researchers regularly since 1965, said Monday its panel of 45 professional forecasters, surveyed May 2-9, is standing by prior predictions of a pending recession, even if it arrives later than previously projected.

Respondents’ median forecast calls for economic growth through 2024 to be modest, with interest rates to remain higher in 2023 than forecast in a February survey. For 2024, the group predicts declining interest rates, moderating job growth and rising unemployment, said the trade group’s president, Julia Coronado of research firm MacroPolicy Perspectives, in a statement.

About 59% of respondents in the latest survey said it’s more likely than not that the U.S. will enter a recession in the next 12 months, starting as early as the third quarter of this year. Panelists’ prior forecasts said a recession could arrive in the first half of 2023.

“More respondents indicate the banking crisis is contained but ongoing, with only about one-fifth believing it will worsen,” the group’s survey chair, Dana Peterson of the Conference Board, said in the statement. “A majority of panelists believes breaching the debt ceiling will not bring on a global financial crisis unless an impasse persists for several weeks.”

Southern Border Trucking Demand May Rise

Industrial cargo truck traffic in the U.S.-Mexico border region remains a relative bright spot in an otherwise slowing domestic logistics economy, according to a new report from Uber Freight, a division of the ride-hailing technology provider.

The report said industrial demand along the border is expected to benefit from the trend of U.S. companies “near-shoring” manufacturing and distribution operations away from Asia and other overseas regions that are recovering from severe pandemic cargo bottlenecks.

Production and distribution hubs are being established on the Mexico side of the border to streamline what’s expected to be an increase of exports from Mexico to the U.S. this year, according to the second quarter logistics report from Uber Freight. The company’s analysts said Mexico-based cross-border carriers’ truck orders from 2021-2022 remained backlogged at the end of this year’s first quarter.

“The opening of new manufacturing companies in the country due to near-shoring is anticipated to affect the market imbalance between northbound and southbound shipments,” the report said. “Mexican portions may face inflation again as demand for exports increases.”

For the larger North American logistics economy, Uber Freight predicts companies’ planned capital investment in supply chain infrastructure “may put additional pressure on operating profits as new capacity projects planned in 2021-2022 come online in 2023.”

Analysts said North American industrial property vacancies tied to freight distribution rose from 3.2% in the fourth quarter of 2022 to 3.6% in this year’s first quarter as newly built facilities were completed. “However, it remains below the historical average of 5.3% and increasing interest rates with demand shifts have driven new construction down,” the report said.

Construction Employment Rises

April’s construction employment increased from a year ago in 42 states but rose from a month earlier in just 24 states as construction firms struggle with staffing, according to the Associated General Contractors of America.

“Contractors continue to report strong demand for projects and have added employees in all but a handful of states over the past year,” Ken Simonson, the trade group’s chief economist, said in a statement. “The fact that employment dipped in April in half the states may reflect an inability to find qualified workers at a time of record-low construction unemployment, not a slowdown in demand.”

The trade group’s May 19 analysis of the latest Labor Department data showed April construction jobs rising from year-earlier levels in 42 states, declining in seven and holding steady in Hawaii. Texas added the most construction jobs for the year at 28,000 for a 3.6% annual gain, followed by New York rising 13,400 or 3.5% and Indiana gaining 11,200 or 7.3%.

For the month, construction employment grew in 24 states and the District of Columbia, while declining in 26 states. The state of Washington added the most jobs for the month, 4,300 for a 1.8% gain, followed by Illinois adding 2,700 for a 1.2% rise and Wisconsin adding 2,600 jobs for a 2% increase.

The largest monthly job declines were seen in Texas, down 8,500 jobs or 1.1%, and New York, down 4,000 jobs or 1%. South Dakota had the biggest monthly percentage gain at 2.7%, while Alaska had the largest percentage decline at 4.2%.

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