This week the economic news affecting the trucking industry is mostly grim. Jobless claims are up, a Big Three bailout deal is being discussed on Capitol Hill, the price of crude oil is falling, and YRC is struggling. On a slightly more positive note, Americans are learning to be more frugal.
Unemployment rate highest in 16 years
New claims for unemployment benefits jumped to a 16-year high this past week according to the Labor Department. More than 500,000 people applied for benefits.
The October unemployment rate was 6.5 percent, and many analysts expect it to go to 8 percent by the end of next year.
Democrats demand plan before voting on Big Three bailout
Congressional Democrats have basically given up in their attempt to get an additional $25 billion in loans for the Big Three automakers.
The Associated Press reported Thursday, Nov. 20, that Democratic leaders have delayed a vote on bailing out the auto industry. They want the companies to offer a plan showing the money will make them financially viable.
Republicans generally favor removing some of the restrictions on how the carmakers can spend the $25 billion they’ve already been allocated, but not giving them any more money.
The Washington Post reported that, with time running out on the lame duck session, no compromise has been reached. There is a possibility that the lawmakers could come back after Thanksgiving and try again. Or the debate could resume after Barack Obama takes office.
Oil dips below $50
Crude oil was trading in New York at midday at about $51 a barrel after dropping below $50 in early trading, the first time in nearly two years that oil prices had dipped that low.
Meanwhile, diesel prices dropped another 3 cents overnight according to ProMiles, putting today’s national average price at $2.77 a gallon.
YRC, the nation’s largest trucking company, has put up more than $1.5 billion of its assets as collateral against its debt.
The company made the move after Standard & Poor’s downgraded YRC’s debt rating , concerned that the trucking company may not be able to meet its debt obligations due to a drop in earnings.
Americans embrace thriftiness
Many Americans are not only spending less, but also showing enthusiasm for stretching their dollars. Their savings are not good for the nation’s overall economy, but with their pensions and job stability suffering, people are learning a new skill: saying no to shopping.
“The New Frugality,” according to The Associated Press, means shopping at a discount chain store, buying secondhand clothes and furniture, or purchasing store brands. Consumers are eating out less, clipping more coupons, and swiping their credit cards less frequently.
As Americans rethink their priorities, signs indicate that the cutbacks may be long-term. A. recent Pew Research Center survey found that more than half of Americans say they have cut back in the past year and about half agreed that people “should learn to live with less.”