Rail Traffic Continues to Expand

I’ve long been in the controversial “no recession” camp in the USA and among the many indicators that have stood out during this call was rail traffic.  It has continually pointed to positive growth in the USA in the face of conflicting data points.  The latest reading shows more of the same with the year over year reading for this week coming in at 3.3% for intermodal traffic and 0.4% for carloads.  The 10 week moving average for intermodal traffic is at 5.1%, but likely to weaken given the recent readings below 5%.    Overall, this indicator seems to be pretty consistent with my overall view – it’s muddle through for now, but not recession.  Here’s more via AAR:

“The Association of American Railroads (AAR) today reported gains in weekly rail traffic for the week ending August 4, 2012, with U.S. railroads originating 288,229 carloads, up 0.4 percent compared with the same week last year. Intermodal volume for the week totaled 243,261 trailers and containers, up 3.3 percent compared with the same week last year.

Thirteen of the 20 carload commodity groups posted increases compared with the same week in 2011, with petroleum products, up 56.3 percent; lumber and wood products, up 29 percent, and grain, up 11.2 percent. The groups showing a decrease in weekly traffic included iron and steel scrap, down 19.7 percent; metallic ores, down 13.3 percent, and farm products excluding grain, down 13.2 percent.

Weekly carload volume on Eastern railroads was down 9 percent compared with the same week last year. In the West, weekly carload volume was up 6.8 percent compared with the same week in 2011.

For the first 31 weeks of 2012, U.S. railroads reported cumulative volume of 8,716,780 carloads, down 2.5 percent from the same point last year, and 7,239,062 trailers and containers, up 3.6 percent from last year.”


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • DanH

    Cullen, how prominently does this indicator play into your forecasting?

  • Greg

    Gotta say. This has been a bold and excellent call in the face of a lot of negative news.

  • Alex Gloy

    Does the “no recession” call stand if you exclude coal from rail traffic?

  • Paul W

    The rail numbers are even stronger ex-coal.

  • quark

    Net out the increase in petro products due to a shift in petro transport methods this year, i wonder what the effwct would be.

  • quark

    The lumber numbers come from building multi dwelling complexes to house those who have either been kicked out of their homes to house the backlog of college graduates being housed in apts vs houses because job growth sucks. Multi dwellings have been popping up like weeds. The economy us om govt life support and the stock market is using the same respirator.

  • Bond Vigilante

    I find the graphs at Calculated Risk more insightful.


    The top graph would suggest that the US economy is weaker than in 2010 and 2011 but stronger than 2009. And certainly weaker than in 2006. A pity that that data form 2008 are excluded.

  • innertrader

    The railroad industry was in 40 years of decline due to GM and the trucking industries successful lobbing efforts. With oil prices increasing over the last 15 years, the railroad industry has been making a long term commitment to completely revamping the rails, railroad beds and railroad cars. Four yrs ago, the backlog was 10 years to receive a new railroad car. The industry will continue to grow for years after a recession hits. Actually, there may be an increase in demand for cheaper transportation as things deteriorate. Therefore, I think there will definitely be a large lag in slower railroad growth at the very least.