Economic impacts of COVID-19

By Steve Latin-Kasper, NTEA Director of Market Data & Research
Meet our experts

This article was published in the May 2020 edition of NTEA News.

Key highlights

  • While many variables will affect rebound timing, economists predict the economy will start growing again in the fourth quarter of 2020 at a 5–10% rate.
  • As of April, forecasts call for total U.S. motor vehicle sales to fall to about 14.5 million in 2020 — down from about 17 million in 2019.
  • Class 4–8 sales are expected to decrease about 30% this year.

As of the beginning of April, the primary argument among economists is not if, but when, the U.S. economy will rebound from the recession entered in the first quarter due to COVID-19. The majority predict the economy will start growing again in fourth-quarter 2020 at a 5–10% rate, after 20–25% decline in the second quarter, and a slight drop in the third. For the year, U.S. gross domestic product is expected to decrease 5.3% from 2019, according to IHS Markit’s April forecast.

Numerous variables will impact rebound timing and robustness. Some countries are just starting to be affected by the virus. A large portion of the states are unlikely to lift stay-at-home orders until at least the end of April. One challenging aspect could be that different geographic regions will continue to be impacted by their specific circumstances and restrictions in place for each state.

Since some economic segments were more negatively impacted by the stay-at-home orders than others, many U.S. companies won’t know for sure how many employees will return until they’re actually called back. This is because not everyone who lost a job is simply waiting to be summoned back. Some industries have benefitted from the pandemic, and are attempting to hire tens of thousands of new employees. Job-shifting is ongoing and will likely increase throughout the second quarter.

This is not as much of a problem in the manufacturing sector, since most of it was designated as essential. However, motor vehicle demand was already falling before COVID-19 became an issue. As millions lost their jobs and incomes, it became obvious demand for motor vehicles and most other durable goods would fall further. The result was temporary plant shutdowns. As of April, forecasts call for total U.S. motor vehicle sales to potentially fall to around 14.5 million in 2020 — down from about 17 million in 2019. For more information on chassis OEM plant shutdowns, visit

When OEMs shut down, it didn’t make sense for suppliers to continue producing, so many temporarily halted operations as well. This negatively affected their suppliers, and so on throughout the supply chain. After OEMs begin producing again, an old phrase — a chain is only as strong as its weakest link — may come to mind. Not all companies involved in the automotive industry’s supply chain will have every employee return to work when plants reopen. It’s impossible to say which businesses/industries will be affected and to what extent — but there will be weak links that cause bottlenecks.

Commercial truck sales declines were somewhat mitigated due to growth in home delivery demand. Truck registration data indicates last-mile delivery fleets grew in March, primarily due to commercial van purchases. However, fleet growth has been limited by labor availability. Higher wages are being offered to make jobs more attractive.

The work truck industry also benefitted from an oil price war between Saudi Arabia and Russia, which caused oil, diesel and gas prices to fall even faster because of the massive slide in demand due to the pandemic. For companies that own large truck fleets, the fuel price drop means lower total operating cost and higher profit margins. Freight forwarders, such as Amazon, UPS and
FedEx, are benefiting the most.

Not too far behind are food retailers large enough to have their own truck fleets — Walmart, Target, Kroger, etc. These companies are benefitting from increases in demand from people eating at home more because restaurants are closed. They are also hiring more employees and buying more trucks/tractors/trailers and truck equipment.

In NTEA’s March 2020 survey to members on operational strategies during the coronavirus pandemic, the majority of respondents indicated orders had not declined due to decreased customer demand. Given how rapidly current economic and operating environments are evolving, the responses might be more optimistic than they would today given the survey timing. There was increased recognition of the potential impact of supply chain disruptions. Approximately 50% of respondents indicated supply chain disruptions would likely impact their ability to provide products and service to customers in the next 30–90 days.

While there has been more demand for commercial trucks and equipment from some application markets, it’s falling in many more. The net-negative impact of COVID-19 is just as true in the larger U.S. economy, as reflected in some troubling economic data. In the last week of March and first week of April, the number of people filing for unemployment benefits reached 2009 levels.

Consensus economic forecasts indicate the unemployment rate could increase by as much as
10 points, from the 3.5% registered in February, to roughly 15% in April. This would normally lead to decreases in average wage, but likely not in this recession. Employers are well aware when the economy starts growing again, the labor market will eventually become just as tight as before the onset of the pandemic — and, as noted, some industries are hiring, which is keeping upward pressure on wages.

Work truck industry
The effect on work truck industry sales has clearly been negative in total, which prompted a downward revision to IHS Markit’s commercial truck sales forecast. Class 4–8 sales are now expected to fall about 30%, to a level of roughly 240,000 units, in 2020. Tractor sales are predicted to drop about 50% (to around 115,000 units). In both cases, totals are in between levels reached in 2011 and 2012, following the most recent recession and economic downturn of 2008/2009. If the forecast holds, 2020 totals will remain well above 2009 sales levels (the bottom of the last recession) when Class 4–8 sales totaled 120,000 units, and tractor sales were about 70,000 units. 

Class 2–3 sales estimates are negative, as well, but much less so because the segment is performing differently than the rest of the commercial truck market. U.S. Class 2–3 commercial van sales in March were level with February based on registration data — primarily due to increased demand for last-mile delivery. As of April, it appears demand for commercial vans will remain stable through the second quarter. However, sales may fall because inventory is running low. The forecast for this segment is therefore dependent on OEM production schedules, which ties back to the previous mention of supply chains and the labor market.

For more market data resources and updates, visit