The latest rail freight data is not quick to validate Warren Buffett’s “all in” wager on the U.S. economy. The latest data shows another steep annual year over year decline despite vastly improving comps (the economy was spiraling to its end at this time last year if you recall). We should be seeing positive year over year improvements in this data based on the optimism regarding the recovery, however, the data continues to come in down double digits. Carloads were down 13.7% while intermodal traffic was down 15.5%.
Albert Edwards is quick to note that the seasonally adjusted data is showing signs of a stall (thanks to ZH):
“We all know that Warren Buffet is not one of those. The investment guru’s foray into railroads this week has attracted much attention. The FT’s Lex column called it “one almighty bet on the US economic recovery.” Funnily enough I was looking at railroad traffic earlier in the week. It was notable, I thought, that on a seasonally adjusted basis, there is very clear evidence that the cycle is stalling out.”
The stock market is cheering another day of “better than expected” data, but at some point we have to ask ourselves just how strong is the real economy when jobless claims are consistently at half a million and the transport sector continues to show very steep declines?
The AAR reports:
WASHINGTON, D.C., Nov. 5, 2009 — The Association of American Railroads today said that freight rail traffic remains down for the week ended Oct. 31, 2009. U.S. railroads reported originating 275,439 carloads for the week, down 13.7 percent compared with the same week in 2008 and down 18.2 percent from 2007. In order to offer a complete picture of the progress in rail traffic, AAR will be reporting 2009 weekly rail traffic with year over comparisons for both 2008 and 2007 going forward.
In the West, carloads were down 14.3 percent compared with the same week last year, and 19.1 percent compared with 2007. In the East, carloads were down 12.9 percent compared with 2008, and 8.7 percent compared with the same week in 2007.
Intermodal traffic totaled 203,860 trailers and containers, down 15.5 percent from a year ago and 14.5 percent from 2007. Compared with the same week in 2008, container volume fell 5.4 percent and trailer volume dropped 32.3 percent. Compared with the same week in 2007, container volume fell 8.9 percent and trailer volume dropped 38.6 percent.
While 15 of the 19 carload freight commodity groups were down compared with the same week last year, increases were seen in grain mill products (9.9 percent), chemicals (3.6 percent), and waste and scrap metal (.7 percent and nonmetallic minerals (.3 percent). Declines in commodity groups ranged from 2.2 percent for the all other carloads category to 55.6 percent for metallic ores.
Total volume on U.S. railroads for the week ending Oct. 31, 2009 was estimated at 31 billion ton-miles, down 12.7 percent compared with the same week last year and 13.2 percent from 2007.
For the first 43 weeks of 2009, U.S. railroads reported cumulative volume of 11,482,619 carloads, down 17.9 percent from 2008 and 18.3 percent from 2007; 8,173,640 trailers or containers, down 16.2 percent from 2008 and 18.6 percent from 2007, and total volume of an estimated 1.23 trillion ton-miles, down 17 percent from 2008 and 17.1 percent from 2007.