ACT Research: Despite Likely Inbound Recession, Factors Continue to Dull a Sharper Downturn

According to ACT’s latest release of the North American Commercial Vehicle OUTLOOK, forecasts this month are essentially unchanged from last month. Demand remains healthy, production remains constrained by supply-chain disruptions and tight labor markets, and freight rates and volumes managed to squeeze out small improvements.

The N.A. CV OUTLOOK is a robust report that forecasts the future of the industry, looking at the next 1-5 years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides a complete overview of the North American markets, as well as takes a deep dive into relevant, current market activity to highlight orders, production, and backlogs, shedding light on the forecast. Information included in this report covers forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.

We believe wage inflation needs to moderate before the Fed can begin turning away from tighter monetary policy. As long as the jobs report remains strong, wage inflation may prove stubbornly persistent–which could  in turn lead to a more-aggressive-for-longer rate hikes.” -Kenny ViethAccording to Kenny Vieth, ACT’s President and Senior Analyst, “We’re hardly at the ‘edge of the cliff’ stage when it comes to our outlook, but as the old investing maxim goes: don’t fight the Fed.” Opining on Federal Reserve policy, he indicated, “We believe wage inflation needs to moderate before the Fed can begin turning away from tighter monetary policy. As long as the jobs report remains strong, wage inflation may prove stubbornly persistent–which could in turn lead to a more-aggressive-for-longer rate hikes.” When asked about the labor market, Vieth said, “Encouragingly, there are signs the labor market is beginning to cool. Examining the monthly employment and wage data published by the BLS, job additions have been gradually trending lower through 2022 and the pace of wage appreciation is easing. That said, we suspect monthly job additions need to fall further to enable more lasting moderation in wage and core inflation.”

Vieth concluded by discussing the potential impact to commercial vehicle markets, “We continue to see at least three factors mitigating a more severe downturn.” He further explained, “Carrier profits and profitability were at record levels in 2021, and contract freight rates are still expected to rise by high single digits this year. Vehicle demand remains healthy, if moderating from here, with pent-up demand and low inventories expected to help mitigate the depth of the downturn. Finally, some prebuy activity is anticipated prior to the implementation of CARB’s Clean Truck mandate, entering a queue already filled with pent-up demand. States representing about 10% of industry demand will be adopting CARB mandates in both 2024 and 2025.”

ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.

ACT’s 68th Seminar is scheduled for February 21-23, 2022. Look for more details on this event over the coming months and save the date for February’s event. When details are available, they may be found at www.actresearch.net.

ACT Research recently completed POWER UP, a look at 7 global regions and more than 20 countries in a review of local regulations, infrastructure, and the impact on the adoption of battery and fuel cell electric commercial vehicles through 2040. This forecast is the first of its kind, a review of the decarbonization of commercial vehicles around the world. POWER UP is available now at https://www.actresearch.net/power-up/.

Additionally, ACT Research published an update to CHARGING FORWARD, a North American-centric battery and fuel cell electric vehicle adoption rate forecast, covering 23 vehicle applications, in Classes 4-8 commercial vehicles, through 2040. CHARGING FORWARD is considered by many industry leaders to be the apex of analysis and economic-based total cost of ownership modeling in the industry. And, it is now available for purchase at https://www.actresearch.net/electric-vehicles-charge/.

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