If rail traffic is any gauge the US economy is continuing to grow albeit at a meager pace. This week’s rail data is still consistent with a muddle through environment and not a recessionary environment. Total carloads were up 0.5% while intermodal traffic is up 5.2%. YTD carloads are up 1.8% which is about consistent with what we’ve seen from real GDP. Clearly, this is not an all encompassing gauge, but it’s served as a reliable warning sign of economic contraction in the past. It would be highly unusual for the economy to weaken substantially without a slowdown in rail traffic.
For now, it looks like this data is confirming my view of muddle through and not recession. It also shows that the Euro crisis is only going to spillover into the US economy if there are serious disruptions in the region that generate a Lehman Bros type of event. Other than that, the weakness in Europe is generally well known. Of course, the risks here remain enormous as Europe’s leaders have proven themselves close to incompetent at every step along the way. While we might be standing on the cliff’s edge, we have yet to fall over….
The AAR has details on this week’s rail report:
“The Association of American Railroads (AAR) today reported gains in weekly rail traffic, with U.S. railroads originating 299,591 carloads for the week ending Nov. 12, 2011, up 0.5 percent compared with the same week last year. Intermodal volume for the week totaled 244,972 trailers and containers, up 5.2 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: petroleum products, up 22 percent; metals and products, up 13.9 percent, and motor vehicles and equipment, up 13.2 percent. The groups showing a significant decrease in weekly traffic included: grain, down 18.3 percent, and primary forest products, down 11.4 percent.
Weekly carload volume on Eastern railroads was up 1.6 percent compared with the same week last year. In the West, weekly carload volume was down 0.2 percent compared with the same week in 2010.
For the first 45 weeks of 2011, U.S. railroads reported cumulative volume of 13,142,833 carloads, up 1.8 percent from the same point last year, and 10,340,944 trailers and containers, up 5.2 percent from last year.”