Truckable Economic Activity (TEA)

Since we started in this business over 40 years ago, MacKay & Company has constantly sought to bring its clients timely and useful information about current and prospective conditions in the trucking industry. In the tradition of our Workshops, Roadshows and DataPulse, we created a quarterly measure of the trucking industry we call Truckable Economic Activity (TEA®).

Most forecasters of conditions in the U.S. trucking industry use economic information such as Gross Domestic Product (GDP) as the basis for their forecasts. But GDP is dominated by services, the demand for which fluctuates much less widely than does the demand for goods, so the cycles driving the demand for transportation – and for trucks – as depicted by GDP are made less severe than they would be if services were removed. As a result, GDP-based forecasts are frequently off the mark. We wanted to find an index that would help us measure what was moving by truck, hence the term Truckable Economic Activity, TEA®.

TEA®, which has five components, is built from the bottom up. Consumption, the largest segment, consists of durable and nondurable consumer goods. Investment is all spending on structures, plant and equipment, and in the first important departure from GDP, the absolute change in inventories (the truck does not care if it is taking goods to or from the warehouse). Exports are the next largest share, followed by imports. Imports represent the second major departure from GDP. TEA® counts them as a positive because the goods have to be moved from the dock to their ultimate destination, while GDP counts them as a negative because they are not, by definition, part of domestic product. We make an additional adjustment by counting only 50% of the value of reported imports because we think imported goods generate fewer truck moves than domestic output. The last component is government spending on goods, a category dominated by state and local governments. TEA® is computed using the constant dollar value – that is the inflation adjusted value – of the categories as reported by the Bureau of Economic Analysis of the Commerce Department.

Unlike other analysts, we come at the forecasting task from both the supply and the demand sides of the equation. Our knowledge of the truck population, both its demographics and its operating procedures, combined with our knowledge of trucking demand derived from TEA® give us a unique perspective on the industry that we think can help make you more successful. We can tailor the analysis to focus on specific vocations, specific market segments in both the short and long term.

We welcome the opportunity to discuss how we can provide you with insights designed for management decisions Please contact us at 630.916.6110 or email us.

MacKay & Company
1 E 22nd St, Suite 300, Lombard, IL 60148
MacKay & Company © All Rights Reserved
| site index