Overview
The economy saw its slowest growth in nearly two years during Q1, but the details matter as a major offset to growth was strong imports. The final bits of March economic data were mixed with consumer spending and sales of new homes coming in strong but manufacturing orders rather lackluster.
Another notable development for freight transportation was advance data indicating a leaner environment for retail inventories.
Consumer spending
While consumer spending on goods was stagnant during the first quarter as a whole, that was not the case in March. Adjusted for inflation, spending on goods rose 1.1% m/m, seasonally adjusted, for the strongest increase since January 2023. Real spending was up 3.5% y/y.
Real spending on non-durable goods outpaced spending on durable goods, but both were up strongly in March. Non-durable goods spending jumped 1.3% while spending on durable goods was up 0.9%.
The Bureau of Economic Analysis noted that the largest contributors to spending growth included gasoline and other energy goods, recreational items, and food and beverages.
Because the data is adjusted for inflation, the spending growth for gasoline implies stronger travel by passenger vehicle during the month. Services spending was also higher m/m but only by 0.2%. The largest contributor was health care, including both outpatient and hospital services.
Strong spending in March could have consequences down the road. Personal savings as a percentage of disposable income fell sharply to 3.2%, which is the lowest rate since October 2022.
Retail inventories
Assuming no significant revisions in retail sales figures for recent months, advance data on retail inventories released this week indicates that retail inventories have become significantly leaner over the past couple of months.
Total retail inventories increased 0.3% m/m, seasonally adjusted. However, retail inventories for motor vehicle and parts dealers rose 1.1% while inventories excluding automotive eased 0.1%.
Based on the latest retail sales data, the advance March inventory figures and downwardly revised inventory estimates for February show a notable drop in the ratio of inventories to sales since January. The ratio for retail excluding automotive fell from 1.17 in January to 1.14 in February and 1.12 in March.
Even before the recent decline, retail inventories excluding automotive were the leanest on record except for the period of extreme disruption during the pandemic: Mid-2020 through the end of 2021.
Trucking
The total broker-posted rate in the Truckstop system ticked up a fraction of a cent during the week ended April 19 (week 16). Higher flatbed rates roughly offset declines in dry van and refrigerated.
The total market rate was at its highest level since the end of June, but rates for van equipment were at their lowest levels in about a year. Flatbed rates were at their highest level since January of last year. Even so, van rates were slightly higher y/y while flatbed rates were down.
For more on week 16 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
North American carload volumes were down 4.1% y/y for week 16, marking the 12th week of y/y declines in 2024, according to data from the Association of American Railroads. The commodities experiencing the greatest y/y declines include coal, metallic scrap, and farm products, which were down 27.6%, 11.3%, and 8.9%, respectively.
Commodities recording the greatest growth were petroleum products, motor vehicles, and forest products, up 17.2%, 7.4%, and 7.1%, respectively. Economically sensitive freight, which excludes grain, petroleum, and coal, saw a moderate increase of 1.8%, primarily due to the exclusion of coal.
Intermodal volumes for week 16 were up 7.1% y/y with containers up 8.3% and the much smaller trailer traffic down 18.3%. Total intermodal traffic has been outperforming carloads so far this year, posting y/y increases in 15 of 16 weeks so far.
