Continuing with last months theme – August 2011 rail traffic is showing little year over year growth, and continues to warn the economy is at stall speed. Econintersect believes transports are the window into the economy. This post will review rail, as well as other major transport indicators to provide an overview of the softening economy.
If the July and August 2011 rail data is repeated in September – rail transport is predicting a GDP of 0.0% in 3Q2011.
The graphic below shows the total traffic on the USA rails – with terrible trend lines. Trend lines are important to understanding the future.
Since mid 2010, rail has been in a long term downtrend. This is the second month of a flat line – and for Econintersect, it takes three months to prove a trend line. Technically, rail remains in a down trend.
Does this mean the economy has stalled? Not altogether because the two major reasons for this collapse of growth are coal and grains. The decline is not broad based.
Coal, because the majority of use is in power production in plants which can use alternative fuels, is not an economic indicator. Neither is grains as movements are more of an indication of crop yields and/or export demand. Food staples are not good economic indicators. Interpreting the above chart with more positive trend lines would indicate the economic soft spot could be ending.
Most finished consumer goods which travel on rail move in intermodal units, containers and trailers, on rail cars.
Here, the trend lines are very negative. Also consider that exports and imports of consumer goods mostly travel in intermodal units. This is forewarning for September and October that less consumer goods were moved to stores.
Definitely the “less good” consumer related rail movements raises alarm bells. Rail is the first reporter of August 2011 data. There was really no change MoM in transport between July and August 2011. Here is how July 2011 transport indicators compare:
- Diesel Usage: Up 1.72% year-over-year
- Truck Transport: Up 3.9% year-over-year
- Container Counts: Year-over-year imports were down 2.1%, while exports were up 7.4%
- Rail Counts: Up 0.0%
All had less good trend lines in July 2011 – but only rail contained a recessionary whiff. If the other transport indicators follow suit – the year-over-year growth rates will remain constant.
In all events, the transport data is indicating the economy has deteriorated.