How happy are Americans to be seeing the gradual lifting of COVID-19 restrictions as vaccinations spread? Very happy, to judge by the participants in the just-concluded Inland Marine Expo. Speakers at the educational events began their remarks by noting how glad they were to see people in person. Even for those who had been seeing each other on Zoom meetings for months, the event felt like a reconnection. For many attendees, IMX was the first in-person event they have experienced since the pandemic restrictions began.
The feelings of liberation and relief Americans are experiencing, and how those feelings could influence their behavior and spending this summer, may have significance for our industry.
As Ken Eriksen, IHS Markit senior vice president, noted during his keynote talk at the opening of IMX, American consumers as a whole have a lot of accumulated spending power to unleash. Stimulus payments succeeded in keeping people afloat, even many of those who had lost jobs. Many families paid down their credit card debt. Savings rates skyrocketed. Farm incomes increased in 2020, thanks to government support. Since then, record high commodity prices, especially of corn and soybeans, have boosted farmers’ incomes further and will influence downstream purchases of farm equipment, which bears on steel prices.
British economist John Maynard Keynes introduced the term “animal spirits” into economics in a 1936 book, where he wrote, “a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most … of our decisions to do something positive … can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction.”
Another term for that optimism is consumer confidence. The Conference Board, which regularly measures it, reports that its latest consumer confidence index is at the highest level since February 2020. “The consumer still matters on many fronts,” said IHS Markit analyst Roger Bernard during the keynote talk at the IMX.
It’s not just U.S. consumers, either. Chinese consumers’ demand for pork continues to drive strong export prices for U.S. corn and soybeans. Eriksen and Bernard both noted a number of improvements to grain facilities along the Lower Mississippi River. Those improvements undoubtedly have much to do with the ongoing deepening of the Lower Mississippi River channel.
But as the Memphis bridge river closure reminds us, the U.S. water transportation system is only as strong as its weakest link—and we have a number of aging weak links. Our infrastructure needs will last beyond this latest burst of consumer confidence. If we are to take full advantage of the consumer spending boom today and prepare for the future, we urgently need infrastructure improvements.