Market minute: Will the economy keep on truckin”? An indicator is saying no.

REAL ECONOMY BLOG | March 17, 2025

Authored by RSM US LLP

U.S. Treasury Secretary Scott Bessent recently said that he was focused on the real economy and was not concerned with a little market volatility.

We agree.

Whenever and wherever possible, it’s a good idea to look at real economy indicators. A focus on the intersection of the real economy and financial markets is even better.

That is why many economists and investors tend to favor transportation indicators when trying to understand the direction of aggregate demand.

One of our favorite coincident indicators is the Dow Jones U.S. Trucking Index, which has declined 24% from its peak on Nov. 11 and is down 21.5% since its recent high on Feb. 18.

The recent market volatility, which has been spurred by policy uncertainty around trade and tariffs, may be stomach churning but is not sufficiently large to tip the economy into recession.

Instead, we think that the economy is experiencing a late-cycle slowdown and that growth should ease to at or below 1.5% in the current quarter.

The combination of easing demand and financial market volatility has caused us to lift our probability of a recession to 20% over the next 12 months, up from 15% at the turn of the year.

But should demand for goods ease further, a broader bout of risk aversion will dampen outlays on capital expenditures, hiring and durable goods subject to import taxes.

In that case, one should anticipate transportation and trucking indices to capture that in near real time and we will have to revisit our growth forecast for this year.