Consumer confidence is decreasing. The Index of Consumer Sentiment, as measured by Thomson Reuters and the University of Michigan, dropped to 72.0 in early July, down 1.6% from June for a second straight monthly decline. Weak consumer sentiment is bad news for a sluggish economy, but indirectly this is gloomy news for trucking as well.

Over the past couple of years, the distribution of inventories within the supply chain has shifted. Compared to the situation a few years ago, manufacturers and wholesalers today hold relatively more inventories of goods, while retailers hold relatively fewer. The figure shows these respective historical levels, plotting inventory data provided by the U.S. Census Bureau.

When fewer inventories are being held at the retail level, a shift in consumer purchasing will more quickly trigger adjustments in shipping volumes. So, for example, a drop in retail sales can be reflected quickly in dwindling load availability for truck carriers.

Together, these factors hold near-term relevance for trucking. If declining consumer confidence is reflected in declining retail sales, then because of tight retail inventories this will soon result in declining trucking volumes.

There is a chance that retail sales may continue to grow even as consumer confidence sags. Thus, the June retail sales volumes report on Monday (July 16th) is especially key to the outlook for trucking.