Truck Tonnage Rules Out A Stock Market Bubble

by: Calafia Beach Pundit

The chart below is the perfect comeback to those who argue that the stock market is once again in bubble territory. What it shows is that the real value of the stock market is positively correlated, over time, with the amount of freight hauled by the nation's trucks. In other words, the physical size of the economy has a lot to do with the real, inflation-adjusted value of the economy.

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Truck tonnage in September hit another all-time high, up 8.4% in the past year, and up almost 30% since the economy began to recover in mid-2009. The physical economy is apparently growing much faster than the official GDP statistics suggest (real GDP growth has been about 2% per year during the current recovery). This is comforting, to say the least. And as the chart shows, since the real value of the stock market hit its all-time high in early 2000, the economy has improved dramatically, while stocks are still struggling to regain their previous high. If stocks were in bubble territory back then, it's far less likely that they're in bubble territory today.

As Calculated Risk notes, the strong performance of the trucking industry owes much to the "robustness to the sectors of the economy that are growing fastest, like housing construction, auto production, and energy output. These industries produce heavier than average freight, which leads to faster growth in tonnage versus a load or shipment measure."

UPDATE: The Chemical Activity Barometer also shows increased physical activity, which at the very least rules out a recession:

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