The “Rubbish” Indicator Points to a Sharp Slowdown in US Economy
Our friend Michael McDonough of Bloomberg Brief has been uncovering a lot of interesting data points and charts (that’s why you should follow him on twitter). The latest interesting chart is, literally, a “rubbish” indicator. Shipments by trains of waste and scrap has very high correlation with GDP growth according to Michael McDonough et al.
If this indicator pointed to sharp recovery of the US economy after the financial crisis, it is now pointing to sharp contraction. The chart below shows waste carloads and GDP growth. As you can see, it is now pointing to sharp contraction in economic activities.
22 Comments
Come on. -4% growth? There’s no way the current environment is almost as bad as 2008.
not almost as bad but probably worse
Interesting graph. A close family friend owns a scrap steel company with several locations throughout the midwest. Their largest consumers are foreigners but they have indicated that their market leads into overall economic slowdowns, however, the above graph is one of many tools.
Inside scoop….I work for the one North America’s largest providers of hazadous waste management/disposal services, and we’re not really seeing a decreae in volumes at all..In fact many of our facilities reacently had some of their best quarters in years. Our industry is strong and healthy, and we’re very bullish about the future.
Interesting, Rich. Thanks.
The chart is probably mostly recyclable scrap, NOT hazardous waste. My guess is that it correlates most to metal prices. The China slowdown has put a damper on metal prices and has probably slowed down the activities of copper thieves. A year ago the news was filled every day with a new outrageous story of copper theft. Not so much anymore.
The volume of hazardous waste is no doubt up due to more stringent regulations. I see that myself at work.
Gary Shilling was already bearish on the US economy (Date: April 11 2012)
http://www.thereformedbroker.com/2012/04/11/that-gary-shilling-video-with-the-sp-800-call-everyones-talking-about
Huh???? It says “Q3 QDT Avg.” But we’re less than 4 weeks into the 3rd quarter!!!!
If it’s still showing this by maybe mid-late August, I’ll start to worry.
This is a stretched correlation. Scrap shipments are a function of commodity prices, foreign demand and primary supply.
Why the worry of how many car loads of scrap? Has not the Republican outlook been to maximumize profits for shareholders and therefore share
prices over the past half century, and not worry where those profits came from? The largest profit enhancement has come from outsourcing as much as possible to countries where the wages are as little as one fiftieth of the minimum wages paid here. And why the concern about the workers? Most of them are not going to vote Republican, so the attitude
of virtually of the financial newspapers that I have read is that profits come before workers. There is always somewhere else on this globe that a service can be provided, or any manufacture made at less cost then here in the west.
r u kidding? Its your belovd Dems who are beholden to Labor and have promised them the sun, moon and stars which has driven wages to uncompetitive levels, and bankrupted the country in the process. Better wake up and smell the coffee. Both major parties have sold us a pack of lies for over 80 years, and just taken our money and our children’s future.
“Its your belovd Dems who are beholden to Labor and have promised them the sun, moon and stars which has driven wages to uncompetitive levels” – Uncompetitive with third world countries? Are you crazy? Essentially you are saying our children’s future should be getting wages competitive with China.
Twenty-thirty years ago Washington elites wrote about forcing deindustrialization of America, as we were “above” those dirty manufacturing jobs. So owners took their “dirty manufacturing jobs” offshore. Then the EPA really got rolling and drove more jobs offshore. Today the EPA is in the process of killing off the coal mining industry. The net result of these policies has been to reduce private industry jobs and increase government dependent jobs, and/or increase unemployment, all of which makes our population more dependent upon government largesse, exactly where the Democrats want us to be. All the while the Dems played class warfare, encouraged class envy, and lied about “profits”. One more term of the present administration and there will be no more private jobs for Brian and his ilk to whine about.
agree!
If complaining about the EPA, remember it was started by a Republican Administration. Was Nixon a Socialist? The Democrats are Socialists, and are beholden to that among a lot of other really bad ideas. It matters not who is in charge, it only matters who controls the purse strings. Sadly, our grandchildren will be witness to the US being a 3rd world country. The BRICs will own us.
The correlation in the magnitudes on that chart looks reasonable (eyeballing it).
But the phase correlation looks poor. In other words, sometimes the “rubbish” leads in time, other times it lags.
Interesting, but not something I would use to judge general economic trends. Maybe good for predicting trash management co. performance, though.
That is actually a good sign, but there is a lot of other signs and we are going straight down. In the middle of 2014 the dollar is challenged by the chineese and since China have been fed by the western countries for so long now, they are incredible strong.
We are going to see unemployment of 25%, the house building is gonna drop drastically.
In other words, the life in USA is gonna be awful, not for the rich of course, and it will take another 30 years to come back to a leading position.
Sorry to be so negative, but it is reality.
The “good” years will vanish rapidly.
I feel sorry for everyone investing in stocks.
Gold will continue up to 2,800 USD
Not good sign, I mean it is a good indicator
Funny, I asked our county dump manager four years ago how his dump trade was going. He told me the county’s tonnage had fallen off noticeably since March. Not the same as rail shipments, I grant you, but a contrary signal to the above interpretation. I read his trend report to indicate that county households were simply buying more prudently and throwing less away.
Late 99 and 04: Waste a leading indicator of GDP. In late 07 and mid 10, the opposite. Did I read right?
It would be interesting to understand the lead/lag time in the data reporting to determine the timeliness of this “indicator”.
I would think a lot of waste in the form of paper, policy and bureaucracy that no one reads. These loads should have a s-load of useless paper from Uncle Sham!