Econintersect has not only forecast a zero / slow growth economy, but also is on a recession watch because of the rate of contraction of the non-monetary indicators which comprise our economic index.
Freight indicators are important pulse points of the economy. The September 2010 rail counts released by the American Association of Railroads on the surface do not support a zero / slow growth scenario. Note: one month of data does not represent a trend. The headlines from the release:
Not Seasonally Adjusted: Carloads in September 2010 ↑ 7.7% over September 2009, ↓ 7.5% from September 2008. Weekly average of 297,502 carloads in September 2010 highest since October 2008. Intermodal in September 2010 ↑ 17.3% over September 2009, ↑ 0.2% over September 2008. Weekly average of 233,058 intermodal units in September 2010 second highest since October 2008.
Seasonally Adjusted: Carloads in September 2010 ↑ 1.9% from August 2010; intermodal in September 2010 ↓ 0. 1% from August 2010.
When the data is broken down, it appears rail traffic is within normal MoM trends if coal and grain traffic is excluded. When doing year-over-year comparisons, the second half of 2008 should be ignored because of the economic collapse.
Grain does not carry major economic multipliers. Coal use is a function of energy consumption – and its relative cost to other forms of energy. Most fired power plants can use two or more forms of energy. Therefore, an increase in coal consumption does not necessarily imply higher electric energy consumption.
The conclusion is that rail is not indicating a recession is around the corner – but remains far below pre-recession levels. MoM change is within historical averages.