Market Talk

Good morning America how are you?

Economist Brian Wesbury reassures us in his WSJ op-ed today that economic recovery is well underway.

“Just about every piece of economic and financial market data is tracing out a V-shaped recovery,” he says.
 
Either he doesn’t look at weekly railroad traffic, or it’s one of those data points that fell outside of “just about.”

Rail traffic “continues to reflect the down economy,” the American Association of Railroads said in its weekly report last Thursday, with total carloads during the week ended October 3 down 17.2% vs the same week a year ago, and 18.1% for the first 39 weeks of the year vs same period in 2008.

By comparison, the weekly change a year ago vs 2007 was down 4.7%, and carloads were off 0.2% for the first 39 weeks of 2008.

There’s 19 carload freight commodity groups — ranging from grain to waste & scrap material — and all were down from the same week last year, “with declines ranging from 2.7 percent for chemicals to 53.2 percent for metallic ores,” AAR reports.

Comparing the cumulative year-to-date periods, 13 of 19 commodity groups were down more than 20%, and 16 of 19 groups show double-digit declines.

Indeed, the drop in carloads has moderated a little since June, but certainly not enough to presage a sustainable recovery.

Simply put, these numbers represent demand in broad swaths of the economy — demand for raw materials as well as finished goods. And as the AAR says, they continue to reflect a “down” economy, not one where a recovery is “well underway.”