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Trucks signal economy is on the move

October 19, 2012|By TIM ROWLAND

For those whose stomachs wind up in knots with every passing presidential election, a drive up the Eastern Seaboard might be in order. There, you will see what might be the most accurate and telling “economic indicator” of all: trucks.

Forget the economists and politicians, if you really want to know in which direction the economy is headed, talk to the waitress who pours the java at your friendly, neighborhood truck stop. Six months before a downturn, truck traffic dries up; six months before a meaningful recovery, the trucks begin to roll.

The difference between truck traffic today and truck traffic over the past couple of years needs no interpretation, no reading of tea leaves. If you’ve travelled any distance over the interstates of late, you’ve noticed that tractor-trailers are beginning to outnumber cars, or so it seems. Don’t be annoyed; this movement of inventory, machines and equipment is the lifeblood of the American economy, and it is very hard to stop no matter which party holds power.

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Remember that if you are the type to lose sleep over who might or might not be in office next spring.

We always seem to think we can outsmart the economy, and to the degree that we can make incremental changes, we can. Inflation hasn’t raised its ugly head in decades, although it’s probably folly to think it never will again.

But as far as the eye can see, there will always be up cycles and down cycles, and that’s just part and parcel of the capitalistic route the nation has chosen. It is true that these down cycles are frequently self-inflicted, be they the panics of the 1800s or the bubbles of the past 15 years.

But without necessarily endorsing the notion that “greed is good,” it is the aggressive pursuit of profit that allows our economy to succeed as well as it does. Sometimes this pursuit crosses the line into what former Fed chief Alan Greenspan called “irrational exuberance.”

Yup, that’ll happen. And when it does the market will make waste of the exuberant. The day traders found this out during the dot-com bubble. The banks and investment houses found this out during the housing bubble. Each time we swear that we will never make the same mistake again, but we always do, and probably that’s not an entirely bad thing. The oilmen of Texas, for example, are fond of the bumper sticker that says, “Lord, if you give me one more fortune, I promise I won’t blow it this time.”

In fact, if those at the very bottom didn’t pay such a high price for the folly of those at the very top, bubbles might not be viewed as terrible things. They might be seen as the wildfires that must necessarily scorch the earth every so often to facilitate new growth.

The new growth that we’re about to see has been increasingly evident over the past two years, as the Dow has climbed to near-record highs. That’s normal. The market, just like the trucks, always goes on a run in advance of an economic upswing.

So consider that the market is now roughly double what it was four years ago. And consider how tumultuous, politically speaking, those four years have been. Despite gridlock, despite debt, despite the debt-ceiling fiasco, despite convulsive swings between spending and austerity, despite a dip in the bond rating, the market, the economy, has behaved pretty much as it always does.

This, of course, is bad news to anyone who builds their house on the idea that one particular party has the answers and the other will lead us down a path of doom. That foundation makes for good sport, but poor forecasting.

The economy does what it will do, and the political parties are largely just along for the ride, just as they are for all matters of our society.

That’s fine. As one wag has suggested, our Founders went out of their way to design a government that wouldn’t particularly work. So while the small minds were focused on politics, the great minds would be free to drive our nation forward. It’s painful to watch some times, but, you could say, so far so good.

Financial cliffs notwithstanding, whoever we elect in November will most likely reap — through no effort of his own — the political benefits that come with a rejuvenated economy. This will leave those who have fretted about slow growth free to fret about overheated growth, and leave everyone else free to get on with business.

Some will still grouse how, in politics, it’s better to be lucky than good. But really, in the grand scheme of things, it’s nothing to lose sleep over.

Tim Rowland is a Herald-Mail columnist.

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