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This article was written on 28 Sep 2012, and is filled under Pretty Picture.

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Rail Traffic A Pretty Picture

Rail Traffic until Week 31 2012

Looks like Freight is on the up! (from Todd Sullivan)

While the mud continues to be thrown between candidates in the US, the recovery continues apace. Excluding Coal shipments, rail traffic is on the up. The transition to Natural gas by pipeline which continues to reduce energy costs in the US has restored some of the competitiveness of the manufacturing industry.

According to Todd Sullivan (note the bit in Italics):

Total N. American rail traffic came in at 707k cars last week. If we adjust for the reduction is coal shipments, we hit the highest weekly total in the last 4 years. Again, we adjust for coal due to the shift from electric utilities from coal (down 19%)  to natural gas (up 35%). It is purely a price issue, not a demand one as electricity production is essentially flat over 2011. Coal is shipped via train, Nat gas pipeline, so less coal mean less rail traffic. It has nothing to do with the health of the economy.

Intermodal traffic set a 4 year record at 319k cars beating the 317k cars it hit 7 weeks ago.   Grains has a huge surge to 36k cars, well ahead of last year’s total.

While this author is not the biggest fan of Obama, he can be given partial credit for the recovery that is underway. At least he didn’t put in place strict environmental laws to slow down Shale Gas as much as environmentalists would of liked. Then again there are limits to what the President and the Executive can do. Back on topic, the growth in non-coal traffic is particularly encouraging. Rail traffic historically has been a good measure as it shows the physical shipment of raw inputs. The higher the number, the better the future prospects for growth.  If it is good enough for Warren Buffett, I think it should be good enough for the rest of us.

The economy, much like the earth is a living, breathing ecosystem. When there are sharp shocks in an ecosystem, it recoils and reacts to the event. Eventually, however, the organism recovers. The US, thanks to the structural diversification of its economy is relying on these new innovations to help it recover from a predominantly financial-based shock. The growth, as always won’t be evenly felt throughout the economy but it does mean that some sort of recovery is underway. Whether the press intends to pick that up or not is another matter. The debt mountain is still a concern that has yet to conclusively disappear.

At the very least, though we can rest assured that something is working. We just need everyone else to be doing so as well

Hat Tip to A Dash of Insight for referencing this blog post over at Todd Sullivan’s Blog.

What do you think? Is it a good indicator? Any reservations


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