We live in an amazing time. Economists, transportation trade journals and the investment analysts who follow the transportation sector paint a picture of an economy and a transportation industry on the rebound. They present a large array of facts and figures to support their case.

Interest rates are at record lows. The affordability of U.S. homes is at record levels. Inventory levels are on the rebound. Car production is up. Key indices such as the U.S. ISM (Institute for Supply Management) that measures economic activity in the manufacturing sector expanded in May for the 10th consecutive month. The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months. The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn."

A host of transportation indices are in very positive territory. The ATA truck tonnage index and the rail tonnage index have been positive for a number of months. Spot market rates are way up and contracted rates are moving into positive territory.

All of this positive news seems to suggest that we were “out of the woods.” The Great Recession and the Great Freight Recession were starting to become a thing of the past. But a number of recent events are shaking people’s confidence in the recovery.

The gulf oil spill, the financial challenges in Europe, and the stock market gyrations all paint a different picture. The daily high definition video footage of the oil spill in the gulf along with pictures of birds covered in oil tell a story of futility and ineptitude. These images are made worse by the statements of the U.S. President claiming he is in charge but cannot fix the problem and by the head of BP Oil who changes his story on a daily basis and who also cannot fix the problem.

Why can’t these talented minds figure out a way to cap a leak the width of a garbage can? The constant media attention this receives and the lack of results are very disheartening. The symbolism of these events go well beyond the oil spill itself, suggesting an inability on the part of our leaders to share the facts, to create a sound plan and to implement a solution in a timely and effective manner. This is a disgrace and a huge distraction from the major economic issues that need to be addressed.

The constant threats of a European debt crisis are creating additional uncertainty and fear. If the solution is less government spending and cuts to government employee wages, why can’t everybody jump on the train and get on with the task at hand? Canada went through a process of bet tightening in the 90’s that did not cause massive job losses. It helped make our country stronger financially.

The report in today’s Toronto Globe & Mail reinforces the view that the recovery is facing strong headwinds. “The once mighty American consumer . . . (who is key to both a Canadian and American turnaround) . . . is emerging from the recession weighed down by worries about jobs and debts and is in no mood to drive a global economic recovery. . . Shoppers turned especially cautious in May, defying economists’ predictions of a rise. Retail sales fell 1.2 percent from the prior month, the first such decline since last September, according to data from the Commerce Department released Friday. . .

Now, however, the effects of the government stimulus are slowly petering out, while banks remain reluctant to extend credit to consumers. Unless either of those factors changes, consumer spending will have to grow the old-fashioned way – through rising incomes.”

The report quotes two esteemed sources. Charles Plosser, head of the Federal Reserve Bank of Philadelphia, noted in a speech that while consumer spending has improved in recent months, it wouldn’t rebound as strongly as it did in prior recessions. That’s because “labour market weakness will likely restrain income growth and thus consumer purchases.” Joshua Shapiro, chief economist at MFR Inc. in New York supports this view by stating that “since the unemployment rate is hovering near 10 percent and hiring remains anaemic, consumer spending will be lacklustre.”

The doomsayers seem to be carrying the day. In a recent financial report the following passage appeared. “Whether the European currency can survive is debatable. . . . Now it appears that many countries balance sheets cannot sustain the debts they have taken on. Despite massive stimulus programs, the world economy is still very fragile and may be too weak to offset these problems. The whole paper money system that the world uses is now in jeopardy of falling apart. . . .”

Canadian companies have to deal with a number of other realities. Some 73 percent of Canadian exports went to the United States last year, despite the rise in the value of the Canadian dollar and the economic challenges in the U.S. If the Canadian dollar remains within a range of $0.90 to parity, it will make it difficult to increase business to that large market. For those companies seeking to build business to Europe, they will face another set of challenges. Some European countries will likely be bogged down in a mix of major spending cuts and tax hikes that will curtail demand for imported goods.

Clearly we are not out of the woods yet. This recovery is going to take time.