Consumer Spending on Goods May Drive Sector Recovery.
Rising costs in the travel and hospitality sectors may prompt consumers to shift their discretionary spending toward home goods, offering a potential lift for the trucking industry later this year, according to the chief economist of the American Trucking Associations.
“People are seeing the prices of things and reacting strongly” Bob Costello said on February 20 at the 2025 Recruitment & Retention Conference, hosted by Conversion Interactive Agency, ATA, and Transport Topics.
Although inflation has eased from its peak rate of 9% in the summer of 2022, overall prices remain high, Costello noted. “Prices aren’t dropping; they’re just increasing at a slower rate” he explained. In particular, high costs for airfare and hotels are causing some consumers to reconsider major trips. “They might start purchasing goods again instead, which could benefit the trucking industry” he said.
Costello pointed out that consumer spending on goods and services is stabilizing, restoring predictability to the trucking sector. “At the onset of the pandemic, 22 million people lost their jobs in just two months,” he said. “However, 135 million people remained employed with fewer spending options no travel, no entertainment. As a result, spending on goods surged, fueling a trucking boom.”
In the years that followed, this trend reversed as consumers embraced “revenge travel” after pandemic restrictions lifted. “People wanted to get out again,” Costello said. “Trucking played a role in that, but to a lesser extent.”
Now, consumer spending patterns are normalizing. “The financial position of consumers is solid, and spending is returning to a balanced mix of goods and services,” he noted.
However, Costello cautioned against assuming that U.S. Gross Domestic Product (GDP) growth directly translates to increased trucking demand. “Around 70% of GDP consists of services, which don’t require transportation via truck,” he pointed out.
The housing market remains another area of uncertainty.
“Companies involved in residential construction supply hauling have faced challenges,” Costello noted, citing high interest rates that have dampened homebuying despite strong demand.
Adding to the sector’s struggles, labor shortages linked to immigration policies have constrained home construction. “Some construction workers are undocumented,” Costello said, questioning whether builders can maintain previous levels of activity without them.
On a positive note, Costello highlighted strong growth in non-residential construction, particularly in infrastructure upgrades and semiconductor plants. “This sector has performed well and continues to rise,” he observed.
Trade policies also present a risk to the economy, particularly if the White House escalates tariff disputes with Canada, Mexico, China, and European nations.
“Tariffs on Chinese imports increase inflation and influence Federal Reserve policies” Costello said. “However, some of these effects can be mitigated through nearshoring or reshoring of production. While it’s not a complete offset, there are benefits for trucking.”
The situation differs for trade with neighboring countries. “Tariffs on Mexico and Canada are a bigger concern,” he said. “There’s no nearshoring advantage because these supply chains are already established. Such tariffs would directly reduce consumer spending.”
Looking ahead, Costello predicts modest growth for trucking but warns of industry consolidation as companies adjust to market realities.
“Some fleets overestimated the speed of recovery and expanded too soon,” he said, noting that many businesses misjudged the persistence of the downturn. “Fleets are calling this the worst downturn they’ve experienced,” he continued, pointing out that while freight volumes dropped more sharply during the 2001 recession and the 2008-2009 financial crisis, those slumps were shorter in duration.
Companies that expanded during the pandemic particularly private fleets that added for hire operations are now scaling back. “Some companies grew their own fleets or entered the for-hire market to meet booming demand,” Costello explained. “Now they regret that move. Once they expanded, they encountered the same industry challenges as everyone else.”
