Not so sure about this particular green shoot. Rail loads are reported weekly and weekly data can be very erratic. Recent July data has been better but the 4-week moving average for total carloads has barely recovered. Weekly intermodal traffic has yet to exceed 190,000 and the moving average to July 18, 2009 still points down (see my chart below). We shall keep an eye on that.
THE BULLS MIGHT NOT BE SO CRAZY AFTER ALL. The Oracle of Omaha’s favorite economic indicator is hinting at an economic recovery — and to my way of thinking, that could be a consequence of President Barack Obama’s slow-motion stimulus package.
Warren Buffett routinely scrutinizes freight-rail data, and it’s easy to see why: Rail loads are an excellent proxy for the volume of goods moving through the economy. Rail Time Indicators, a monthly compilation of data from the Association of America Railroads, is especially illuminating. And in defiance of the economic community’s conventions, it is written in language so clear that even a congressman might understand it.
The July 21 edition, available online at www.aar.org/NewsAndEvents/RailTimeIndicators.aspx, shows that average weekly U.S. rail carloads headed up in June for the first time all year, from 249,000 in May, to 260,000. Coal shipments increased nearly 6% month-over-month to 125,000 carloads. Intermodal traffic, which is largely consumer goods in trailers and shipping containers riding on flat cars, went from about 181,000 carloads to 189,000 — a small but potentially telling movement. Carloads of crushed stone, sand and gravel rose from about 15,000 cars to 16,000 cars.
Sand, gravel and crushed stone are used in road construction and the manufacture of cement. With apologies to Prime Suspect‘s Chief Detective Inspector Jane Tennison, it’s no stretch to conclude that this uptick, albeit small, is being aided and abetted by the $787 billion American Recovery and Reinvestment Act. About $150 billion has been earmarked for infrastructure projects, with $27 billion specifically targeted at roads and bridges. The stimulus money has been very slow getting out the door. As of July 17, a total of $187.4 billion in stimulus money was available for all purposes and $67.4 billion had actually been paid out.
To get some further insight, I paid a call on the railroad association’s headquarters in Washington and met with economist Daniel Keen, who is vice president of policy analysis. He cautioned that one month’s data do not constitute a trend. And, in fact, there are plenty of gloomy numbers right now in the world of trains: Rail traffic is down 19.5% year-over-year. Every category of shipments remains far below 2006 and 2007 levels. The crushed stone, gravel, and sand category, for example, is off 25% year-over-year.
Just the same, Keen wasn’t willing to dismiss my optimistic reading of the June data out-of-hand, saying that the increases for the month could be positive.
Some of the data’s subsets may actually be leading indicators. Keen points out that in the July 1990 to March 1991 recession and the March 2001 to November 2001 recession, intermodal traffic turned up very close to what turned out to be the end of the slump. (…)
Related posts:
- US RAIL CARLOADS UP STRONGLY LAST WEEK
- US RAIL FREIGHT TRAFFIC WEAKENS
- RAIL FREIGHT TRAFFIC STILL WEAK
- US RAIL TRAFFIC UP SOME MORE
- ANOTHER YELLOWING GREEN SHOOT: RAILROAD VOLUMES
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