RAIL TRAFFIC CONTINUES TO POST GAINS
Consistent with this morning’s GDP report, rail traffic continues to post gains. The U.S. economy is holding up despite persistent fears of a renewed downturn. The growth isn’t anything to write home about, but the muddle through scenario certainly appears alive and well. This week’s rail data was somewhat mixed with total carloads showing a decline while intermodal jumped 4.2% YoY. I still think it all adds up to an economy that is growing modestly while the government runs large budget deficits and the private sector’s debt position continues to heal. It’s not a great environment, but it’s also misguided to get bogged down in the debate over a new recession. This is and has been one long recession. The AAR has the details on this week’s rail data:
“The Association of American Railroads (AAR) today reported mixed results for weekly rail traffic, with U.S. railroads originating 301,864 carloads for the week ending Oct. 22, 2011, down 0.5 percent compared with the same week last year. Intermodal volume for the week totaled 245,404 trailers and containers, up 4.2 percent compared with the same week last year.
Ten of the 20 carload commodity groups posted increases compared with the same week in 2010, including: nonmetallic minerals, up 22.4 percent; iron and steel scrap, up 20.9 percent, and metals and products, up 19.2 percent. The groups showing a decrease in weekly traffic included: grain, down 25.6 percent, and coke, down 11.5 percent.
Weekly carload volume on Eastern railroads was up 0.1 percent compared with the same week last year. In the West, weekly carload volume was down 0.9 percent compared with the same week in 2010.
For the first 42 weeks of 2011, U.S. railroads reported cumulative volume of 12,236,877 carloads, up 1.7 percent from the same point last year, and 9,613,018 trailers and containers, up 5.3 percent from last year.”
I’m feeling as though it is hard to argue with the ECRI guys, but sounds like you arent buying into that Cullen?
It just seems like a moot point. If we’re in a balance sheet recession then what difference does it make if growth technically goes negative again? The economy remains weak. Are we really going to quibble between -1% and +1%? It seems like we’re splitting hairs. Now, if we’re talking about some sort of substantial decline like a -5% drop in growth then it’s a conversation worth having, but I don’t see that as being a reality given the massive government deficits and the continued deleveraging.
Hi Cullen,
It still worries me that road transport is down. If rail starts to come off then you might have your -5% within the next 12 months.
In terms of Europe the “fix” seems to be very short term – it reminds me of when you squeeze your tooth paste tube – a bubble is always created and if you get lazy and keep squeezing without evening out the bubbly bits it gets really messy towards the end! I still think Europe can’t escape a messy ending?
Interesting information.
I do have one nitpick… I truly don’t trust the word “muddle”. It implies a gradual decline to me, actually. I can’t help but remember the Senenca Cliff or whatever it’s called. People think some decline can be managed but there comes a point when everything declines dramatically.
That article on the Government Put was very good. I mention it here because I keep putting Government Put and “muddle” and don’t get good feelings. It’s real hard to price things these days!
Thanks for this article.