Railroad Freight Indicator Suggests U.S. Economy Gaining Steam

The nation's railways are the circulatory system of the economy, so any evidence that points to rail's recovery argues against the likelihood of a double-dip recession. That's why it's worth noting that Ed Yardeni, the bullishly prescient president of Yardeni Research, just updated his indicators for things like rail loadings and shipments and -- with some exceptions -- he says train cargo is gaining momentum.

In a Monday report, Yardeni told clients that total railcar loadings dipped and stalled earlier this year, then accelerated and popped during the week of September 4. They jumped 9% year-to-date and 12.7% year-over-year, notching their best reading since the middle of Feb. 2009.

On the Right Track

"There are no signs of a double dip in the measures of total railcar traffic, though there are a few important categories that may be running out of steam," Yardeni says.

Weekly railcar loadings are volatile, so Yardeni and company smooth them by charting a 26-week average. Here's how loadings look compared with the S&P Transportation index.

In other bits of bullish data, total carloads hit a new cyclical high during the week of Sept. 4, according to Yardeni, and chemical shipments rose at their best pace since Nov. 2008. Freight shipments by rail of metals and products have also rebounded, Yardeni says.

Autos, Housing, Off the Rails

As for the bad news, rail loadings for the automotive and housing industries remain lousy. That hardly comes as a surprise, given the weakness in sales of new cars and new homes, and neither accounts for much of the country's rail traffic, anyway. Yet it's troubling, nevertheless.

"Both industries are important for the economy, and their respective railcar loadings are great weekly coincident indicators of their activities," says Yardeni. "After rebounding solidly last year, both have stalled at still very depressed levels."

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Dan Burrows wrote "peaked their interest." Where is his editor? Dan meant to say "piqued their interest." tch, tch!

September 25 2010 at 7:33 PM Report abuse rate up rate down Reply
John Kiegiel

Rail traffic may be picking up from the low of lows. Coal, Produce, Metal is what is happening. That is why Warren Buffett bought into Burlington Northern. Coal is and will be getting bigger as a commodity

September 14 2010 at 12:52 PM Report abuse rate up rate down Reply

The chart would be more interesting if there was a line showing the price of gas or diesel. I bet that line would parallel the two lines you have there. And another line showing the increase in passenger travel. I bet that line would also parallel all three lines without the dramatic dip in the last couple of years. All four lines would show a relativism as to how the economy is going and how people and businesses are coping. Or in other words finding the most economical means of transportation of goods and the mobility of Americans. I for one have used rail travel to other states for the last three and half years, about the same amount of time this recession has been on. And yes, the ticket price is less than the gas alone on a reliable car, not to mention all the wear and tear. Besides, no detours, rush hour congestion, and I am quite relaxed upon arrival.

September 14 2010 at 12:50 PM Report abuse rate up rate down Reply

Borrowed money does not make a recovery! As we see year after year, the government lacks the vision to put the country on a sustainable recovery path. The only thing they know is to pump more money into the economy and hope that somehow something good comes out of it. It is like a business that is trying to produce products that nobody wants. They can't sell. But they borrow money, pay the employees and keep production anyway. Meanwhile the debt accumulates. Government has been doing this for many decades. The mistake was to inflate the bank credit (which is almost our entire money supply), non-stop for 50 years. While the debt inflated exponentially, the GDP grew linearly. This is not sustainable. People cannot borrow non-stop. But no government wanted a recession on their watch, so they encouraged people to borrow more to inflate the money supply. The root cause of our problem is excessive debt: http://www.tradingstocks.net/html/inflation_deflation_credit_bub.html

September 14 2010 at 12:38 PM Report abuse +1 rate up rate down Reply

Not very many, twice my age... I wonder if I missed my station? Absent-mindedness has given me a lot of extra miles, for free. Also, I've seen a lot of scenery, along the way. Oh poop! I can't find my ticket and the conductor is coming. Where is Jesse James, when you need him?

September 14 2010 at 11:15 AM Report abuse rate up rate down Reply

It's taken a lot of steam to get this train moving. It appears that the train will be carrying different freight and new passengers. A lot of new faces onboard, which is scary, at first. Some of these kids are half my age, but it appears that they've learned from my mistakes... That makes them quite smart, even though it makes me sore. I'll get over it, have to! :-)

September 14 2010 at 11:10 AM Report abuse rate up rate down Reply


September 14 2010 at 10:12 AM Report abuse +1 rate up rate down Reply

The economy is getting stronger. This is terrible news for conservatives. Oh, horror of horrors, it looks like things are getting better no matter how hard they try to block progress.

September 14 2010 at 7:40 AM Report abuse -3 rate up rate down Reply