Saturday, August 22, 2009

Economy is "Less Worse"

Is the economy turning around? This news item about a report on railroad business is not encouraging. "Less worse" is the best that can be said. Here is the full monthly AAR report.

WASHINGTON—Despite signs that railroad volumes are becoming “less worse,” the Association of American Railroads (AAR) reported that freight volumes were down for the week ending August 15 compared to the previous week last year.

Weekly carload freight, which does not include interodal data, came in at 276,488 cars, which was down 17.1 percent compared to the same timeframe last year, said the AAR. On a sequential basis, this is better than last week’s 274,633 carloads. Carloadings were down 16.6 percent in the west and 17.8 percent in the east.

Railroad business is often seen as a good leading economic indiactor.


  1. Is a comparison to one year ago really fair though? At that time, the markets were still flying and the economic meltdown was still months off (^DJI). I'm not sure what the best way to measure the recovery is, but comparing post-meltdown to pre-meltdown just one year later doesn't seem fair. If August 2010 number are down compared with this month's numbers, then we have issues.

  2. I'd like to see the trend lines for carloadings for the next 6-8 weeks, Doug. While encouraging, there is still a lot of rolling stock in storage. My take on this is that once we start to see more of the stored cars re-entering service (my personal "barometer" is that string of Soo Line center-beam flats on the old North Western from Olin Rd to McCoy...when those get pulled out, I'll know that housing construction must be picking up - those are bulk lumber carriers - which I think is a realistic indicator on how the economy is going).

  3. "Is a comparison to one year ago really fair though?"

    Fair? Yes, I think so, in that it reflects how badly the economuy plunged.

    The 2009 US carloadings are even farther below the 2006 and 2007 levels.

  4. Carl,

    One should never look at Dow Jones Industrials as an indicator of the economy as these prices are are influenced only by greed and fear. Looking at US carloadings is a real indicator of industrial output and commerce, and not a "fake" one like the stock market.

  5. Doug: I agree that it does reflect how bad the economy plunged. To expect the recovery to be well on its way is expecting too much. This is years in the making. The deregulation of the markets passed in 12/2000. It is encouraging though to see little points of light. One example is the unexpected improvement in the jobless rate last month.

    The DJI is greed and fear? Maybe a little. You can't say that it doesn't reflect the health and mood of the economy to some degree though. Also, the stock market is a leading indicator. In past recessions, the stock market is traditionally one of the first things to come back (as opposed to jobs for example).

  6. Thanks for the comments. I recently started getting these reports at work and thought they were interesting enough to share.