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More broadly for trucking, Costello noted that the balance of consumer spending between goods and services is returning to more normalized levels. (Joe Howard/Transport Topics)

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NASHVILLE — The chief economist of American Trucking Associations said consumers’ sticker shock over the costs associated with booking vacations in the months ahead could send them to instead splurge on goods for their homes, which could provide a boost for trucking later in the year.

“People are looking at the prices of things and freaking out,” Bob Costello said Feb. 20 at the 2025 Recruitment & Retention Conference, hosted by Conversion Interactive Agency, ATA and Transport Topics.

Costello noted that while the pace of inflation has slowed since the historic 9% pace from the summer of 2022, prices are not coming down. “Prices are still high, they’re just rising more slowly than before,” he said. In particular, he said costs for flights and hotels have people rethinking big trips. “They might start buying goods again, and that could help trucking,” Costello said.

More broadly for trucking, he noted that the balance of consumer spending between goods and services is returning to more normalized levels. That’s a positive development for trucking, Costello noted, since it restores a level of predictability lost during the pandemic.

“At the start of the pandemic, 22 million people lost their jobs in two months,” he said. “There were 135 million people still working and making money, but they had no outlets to spend their money. No travel, no movies, no concerts. So we just started buying stuff, and trucking boomed.”

Fast forward a few years, and the opposite happened, Costello noted, as a wave of what he called “revenge travel” took hold and people who’d been cooped up in their homes started traveling again. “People got back out there,” he said. “You need trucking for that, but not as much.”

Currently, the spending mix is settling down. “The consumer is in a good spot — we are moving back to more normal levels of goods vs. services,” Costello said.

Still, he cautioned against putting too much stock in gains in U.S. Gross Domestic Product serving as a harbinger of good things to come for trucking. “About 70% of what is embedded in GDP are services, and you are not putting services in a trailer,” he said.

Also uncertain is the outlook for the housing market.

“If your company hauls residential construction supplies, it’s been tough,” Costello said, noting that while there is strong demand for housing, high interest rates have kept buyers on the sidelines.

Meanwhile, the Trump administration’s deportation efforts have taken a toll on the labor pool for home construction. “Some construction workers are undocumented,” Costello noted, and wondered aloud if builders will be able to maintain earlier levels of building activity without those workers.

On a more positive note, Costello said non-residential construction spending on projects such as infrastructure upgrades and semiconductor plants has been robust. “This is on the rise — it’s been quite good,” he said.

Casting broader uncertainty over the economy is the long-term effects of tariffs should the White House escalate its brewing trade conflicts with Canada, Mexico, China and some European nations.

“Putting tariffs on goods coming in from China is one thing,” Costello said. “I will tell you as an economist that it raises inflation, and it also has an impact on what the [Federal Reserve] is doing. But, when it comes from Asia, or China specifically, there can be some offsets. Eventually, over time, you can get nearshoring or reshoring. I’m not going to tell you that it’s a complete offset of us in the trucking industry, but there are certainly some benefits to that.”

The situation is different for neighboring countries.

“If you get tariffs on Mexico and Canada, that’s a different ballgame,” Costello noted. “There is no more re-shoring or near-shoring; it’s already here. That will, in fact, cut into consumer spending. That’s something you need to watch.”

While Costello is forecasting modest growth in demand for trucking this year, he notes that a shakeout in capacity could come as companies that expanded during the boom times of the pandemic trim their operations.

“I think people got ahead of themselves and thought the recovery was coming sooner, and it wasn’t,” he said, noting that fleets have lamented the stubborn longevity of the industry’s demand trough. “Fleets are saying this is the worst downturn they can remember,” Costello continued, pointing out that while freight volumes fell steeper during the 2001 recession and Great Recession of 2008-2009, those downturns didn’t last as long.

Now, carriers that expanded during the pandemic — including private fleets that added for-hire operations to capitalize on that era’s surging demand — must course-correct. “Some of them grew their own fleets and some of them started a fleet to meet demand for for-hire capacity. And now they wish they hadn’t,” Costello said. “Once they branched out they had the same problems as the rest of the industry.”