Whats going on with railroad traffic falling?

[CMStPnP]

Lots of concern on Wall Street with railroad traffic levels falling and trending downward.    Many are pointing to it as a sign of recession.    Personally, despite the Chinese House of Cards teetering.........I don't see a recession for the United States this year and am curious why traffic would be declining on the mercantile side of the fence.     Keep hearing that the Big Three had their best year in a while and other manufacturing in the United States doing pretty well.   Is it just a case of inventories being too high and needing to be worked off?

Yes, I know Baaken Oil has declined along with Coal but Wall Street is really looking at the fall off in intermodal and merchandise shipments.     I would think would be normal this time of year, right after Christmas but what do I know?

[BaltACD]

Rail traffic has always been considered a 'leading economic indicator'.

[schlimm]

Oil, ethanol, coal and grain have been a large proportion of carloadings. Drastically cut two of them and you have the reason for the reduction.

[PNWRMNM]

Balt is correct, rail traffic has long been an economic indicator. My recollection is a current as opposed to leading but that is a quibble on my part. Since shippers have moved so much of the manufacturer to consumer traffic to the highway the more accurate indicator is a combination of rail traffic and truck tonnage, a figure I know is available. If I were trying to answer questions about the state of the economy that is what I would be looking at.

The other traditional current economic indicator is the unemployment rate, with 4-6% taken as "full employment". In fact the Labor Department calculates several unemployment rates, each calculated on a different basis. The rate you see reported on TV is number unemployed and looking for work divided by number unemployed and looking for work plus number employed.

Since 2008 there are large numbers of people who have not, can not get work and have simply droped out of the labor market. They are not included in the commonly reported unemployment rate because they are not looking for work.

There is another large group of people who are under employed. There are two meanings to this. The first and most commonly recognized is those who are working part time but want full time and those who are working below their expertise. Evaluating the last part is a bit tricky. A guy or gal who is trained and has worked as civil engineer but is flipping burgers is obviously under employed. Then there are the millions of college educated who hold economically worthless degrees and are flipping burgers. Are they underemployed or just dupes of the Education Establishment? That is a political question and I am not going there. All of these people are counted as employed, even though each situation is a waste of human capital. If the college grad quits their burger flipping job and moves in with mom and dad, they are out of the labor force and not counted as unemployed. 

The point of this is that we have been in a recession since the housing bubble collapse of 2008. Millions of people have not been able to find a job and quit looking for work. When they quit looking they have removed themselves, officially, from the labor market which by definition takes them out of both the denominator and numerator of the enemployment rate calculation which decreases the reported unemployment rate. That rate gets reported and the gullible think all is well when in fact the situation is getting worse.

All is not well. The best indication of that is to look at the version of the unemploymnet rate that captures those who have left the labor market, that is, have quit looking for work. This figure, while available, is seldom reported and never touted by the Administration in power. Another indicator of the same thing is the labor participation rate, which has fallen for the past several years. That is an indication of the discouraged part of the work force, and it is millions of people.

This country is still in a recession. The 'happy' unemployment figures reported by the administration and the media are an artifact of how they are calculated, which was fine in the 1950's and 1960's where one either had a full time job or nothing and where work was available to all those who wanted to work and had at least a modicum of skill. Those days are long gone and the typically reported unemployment rate does not capture today's reality.

If you do not think this county is in a recession, you must be in the 1%, working for the government, or living in the District of Columbia economic bubble.

Mac McCulloch

[BaltACD]

Railroads generally tend to be a leading indicator because the commodities they are transporting are the raw materials for various manufacturing processes - If manufacturers are dialing back their plants, they don't get as much raw materials to keep their plants operating.  

Trucking is more a current economic indicator as they are more involved in manufacturer to consumer supply chain of what the economy's final output is.

[tree68]

Christmas is over, and along with it the rush of materials to consumers, which results in less intermodal.

These days, people tend to look at the really short term instead of the long term (24 hour news cycle and all that).  There weren't as many trains today as yesterday, so must be rail traffic is down!

That doesn't mean overall rail traffic isn't down, and for the reasons Balt mentions, but sometimes you have to wonder...

 

[schlimm]

PNWRMNM

Balt is correct, rail traffic has long been an economic indicator. My recollection is a current as opposed to leading but that is a quibble on my part. Since shippers have moved so much of the manufacturer to consumer traffic to the highway the more accurate indicator is a combination of rail traffic and truck tonnage, a figure I know is available. If I were trying to answer questions about the state of the economy that is what I would be looking at.

The other traditional current economic indicator is the unemployment rate, with 4-6% taken as "full employment". In fact the Labor Department calculates several unemployment rates, each calculated on a different basis. The rate you see reported on TV is number unemployed and looking for work divided by number unemployed and looking for work plus number employed.

Since 2008 there are large numbers of people who have not, can not get work and have simply droped out of the labor market. They are not included in the commonly reported unemployment rate because they are not looking for work.

There is another large group of people who are under employed. There are two meanings to this. The first and most commonly recognized is those who are working part time but want full time and those who are working below their expertise. Evaluating the last part is a bit tricky. A guy or gal who is trained and has worked as civil engineer but is flipping burgers is obviously under employed. Then there are the millions of college educated who hold economically worthless degrees and are flipping burgers. Are they underemployed or just dupes of the Education Establishment? That is a political question and I am not going there. All of these people are counted as employed, even though each situation is a waste of human capital. If the college grad quits their burger flipping job and moves in with mom and dad, they are out of the labor force and not counted as unemployed. 

The point of this is that we have been in a recession since the housing bubble collapse of 2008. Millions of people have not been able to find a job and quit looking for work. When they quit looking they have removed themselves, officially, from the labor market which by definition takes them out of both the denominator and numerator of the enemployment rate calculation which decreases the reported unemployment rate. That rate gets reported and the gullible think all is well when in fact the situation is getting worse.

All is not well. The best indication of that is to look at the version of the unemploymnet rate that captures those who have left the labor market, that is, have quit looking for work. This figure, while available, is seldom reported and never touted by the Administration in power. Another indicator of the same thing is the labor participation rate, which has fallen for the past several years. That is an indication of the discouraged part of the work force, and it is millions of people.

This country is still in a recession. The 'happy' unemployment figures reported by the administration and the media are an artifact of how they are calculated, which was fine in the 1950's and 1960's where one either had a full time job or nothing and where work was available to all those who wanted to work and had at least a modicum of skill. Those days are long gone and the typically reported unemployment rate does not capture today's reality.

If you do not think this county is in a recession, you must be in the 1%, working for the government, or living in the District of Columbia economic bubble.

Mac McCulloch

 

You might at least give some credits for your political spiel to Limbaugh and Hannity.

[zugmann]

This started long before 2008.

[Ulrich]

On the merchandise side lower oil prices and general trucking overcapacity can't be helping the railroads either.  

[Euclid]

PNWRMNM

Balt is correct, rail traffic has long been an economic indicator. My recollection is a current as opposed to leading but that is a quibble on my part. Since shippers have moved so much of the manufacturer to consumer traffic to the highway the more accurate indicator is a combination of rail traffic and truck tonnage, a figure I know is available. If I were trying to answer questions about the state of the economy that is what I would be looking at.

The other traditional current economic indicator is the unemployment rate, with 4-6% taken as "full employment". In fact the Labor Department calculates several unemployment rates, each calculated on a different basis. The rate you see reported on TV is number unemployed and looking for work divided by number unemployed and looking for work plus number employed.

Since 2008 there are large numbers of people who have not, can not get work and have simply droped out of the labor market. They are not included in the commonly reported unemployment rate because they are not looking for work.

There is another large group of people who are under employed. There are two meanings to this. The first and most commonly recognized is those who are working part time but want full time and those who are working below their expertise. Evaluating the last part is a bit tricky. A guy or gal who is trained and has worked as civil engineer but is flipping burgers is obviously under employed. Then there are the millions of college educated who hold economically worthless degrees and are flipping burgers. Are they underemployed or just dupes of the Education Establishment? That is a political question and I am not going there. All of these people are counted as employed, even though each situation is a waste of human capital. If the college grad quits their burger flipping job and moves in with mom and dad, they are out of the labor force and not counted as unemployed. 

The point of this is that we have been in a recession since the housing bubble collapse of 2008. Millions of people have not been able to find a job and quit looking for work. When they quit looking they have removed themselves, officially, from the labor market which by definition takes them out of both the denominator and numerator of the enemployment rate calculation which decreases the reported unemployment rate. That rate gets reported and the gullible think all is well when in fact the situation is getting worse.

All is not well. The best indication of that is to look at the version of the unemploymnet rate that captures those who have left the labor market, that is, have quit looking for work. This figure, while available, is seldom reported and never touted by the Administration in power. Another indicator of the same thing is the labor participation rate, which has fallen for the past several years. That is an indication of the discouraged part of the work force, and it is millions of people.

This country is still in a recession. The 'happy' unemployment figures reported by the administration and the media are an artifact of how they are calculated, which was fine in the 1950's and 1960's where one either had a full time job or nothing and where work was available to all those who wanted to work and had at least a modicum of skill. Those days are long gone and the typically reported unemployment rate does not capture today's reality.

If you do not think this county is in a recession, you must be in the 1%, working for the government, or living in the District of Columbia economic bubble.

Mac McCulloch

 

Mac,

Your assessment is perfect.

I think what we are seeing is a slowdown in rail business as a result of our slowing national economy, as opposed to a “railroad recession” per se.  I believe that the performance of the U.S. economy is nearly impossible for the public to accurately gauge due to considerable misrepresentation by sources that have an interest in promoting the perception of a good, strong economy.  The only thing strong about the U.S. economy is the spin. 

You cannot assess the economy according to news reports.  Just reporting a negative economy affects the consumer in a way that is bad marketing for business.  If you are working at a regular job that is paying what you are worth, the true economy is invisible.  It would be like looking out the window and evaluating the economy.  Look at the GDP reports.  Growth has been 1-2% off and on for the last two years.  A couple quarters in the last two years were negative by roughly 2-3% percent. 

But even the GDP is nebulous with its predictive estimate, its first announcement, and then the follow-up adjustments over the next weeks and months.  If we get a negative quarter, that is said to be the fault of the weather.    

The limited sources that I trust indicate that our economy is not good and barely growing, if growing at all.  For the work I do, I watch manufacturing jobs.  Since 2008, the best economic performance was 2012, and it has been declining ever since.  In my opinion, this overall period since 2008 is the worst U.S. economy in at least the last 65 years; not only because of the weak growth, but also because of the long duration.  The railroad business is one accurate and readily visible and reliable indicator of the true economy.

The reason that this connection is not so obvious is that we are being led to believe that the U.S. economy is in recovery mode.  So the currently slow state of the railroad industry appears to be a separate phenomenon running against the trend.  I would say that it is actually one true indicator of the actual state of the U.S. economy.   

[tpatrick]

schlimm

You might at least give some credits for your political spiel to Limbaugh and Hannity.

You may call it a "political spiel," so tell us how it is wrong. What facts do you have to refute Mac?

[schlimm]

Ideologues, whether left and right, are immune from facts; they dismiss them in favor of their political message.  I've seen how communists are "always right" in much the same way as the Limbaugh crowd. So I do not waste time "refuting" them, just pointing out what they are doing.   This forum once was relatively free of politics, but since the new crew of moderators took over you'd think this was an extension of the Hannity or Levin shows, as well as a haven for trolls.  And hardly surprising that Mac and Euclid find common ground here.

[Euclid]

schlimm

Ideologues, whether left and right, are immune from facts; they dismiss them in favor of their political message.  I've seen how communists are "always right" in much the same way as the Limbaugh crowd. So I do not waste time "refuting" them, just pointing out what they are doing.   This forum once was relatively free of politics, but since the new crew of moderators took over you'd think this was an extension of the Hannity or Levin shows, as well as a haven for trolls.  And hardly surprising that Mac and Euclid find common ground here.

 

Why don't you just talk about the economy then?

[Deggesty]

My wife worked for the Census Bureau (never on the decennial Census), and one of her monthly assignments was to interview people living at the addresses (she was sent a list avery month) to learn their employment status--working, not working but wanting to, not working and not looking for work. The results of this survey were tabulated but, of course, the number of people who could work but were not looking for work was not released to the public.

She retired several years before I did--and I have been retired for a little over nine years.

[wanswheel]

I think the economy is hurt by the decline in retail.  Fewer ‘impulse’ purchases by people avoiding the mall because they buy their routine things online nowadays. Also, who needs coal anymore?

Excerpt from Energy Wire, Jan. 12

The average U.S. temperature in 2015 was 54.4 degrees Fahrenheit, the second-warmest year on record, according to the National Oceanic and Atmospheric Administration. But December 2015 averaged 38.6 degrees Fahrenheit, setting a high record for the Lower 48 states.

El Niño is driving an abnormally warm winter, which is concerning for companies that sell natural gas and coal. Instead of burning natural gas to stay warm, the United States is shoving it into storage. That keeps gas cheap, which keeps coal unattractive…

Chinese coal imports in 2015 were almost a third lower than they were in 2014, according to Capital Economics. That could be a blip, or it could reflect larger trends…

Beijing has said it wants to transition the economy from a manufacturing-led one to a consumer-led one—meaning less reliance on coal.

Those conditions would be daunting enough for a U.S. coal producer. But even worse, the strong U.S. dollar is driving buyers to other countries. Russia's ruble fell about 20 percent last year, and the Australian dollar some 10 percent, according to Capital Economics.

[rrnut282]

schlimm

 

You might at least give some credits for your political spiel to Limbaugh and Hannity.

So, are you saying the truth isn't welcome here?  It doesn't matter where it comes from if it is right.

[NKP guy]

PNWRMNM

Balt is correct, rail traffic has long been an economic indicator. My recollection is a current as opposed to leading but that is a quibble on my part. Since shippers have moved so much of the manufacturer to consumer traffic to the highway the more accurate indicator is a combination of rail traffic and truck tonnage, a figure I know is available. If I were trying to answer questions about the state of the economy that is what I would be looking at.

The other traditional current economic indicator is the unemployment rate, with 4-6% taken as "full employment". In fact the Labor Department calculates several unemployment rates, each calculated on a different basis. The rate you see reported on TV is number unemployed and looking for work divided by number unemployed and looking for work plus number employed.

Since 2008 there are large numbers of people who have not, can not get work and have simply droped out of the labor market. They are not included in the commonly reported unemployment rate because they are not looking for work.

There is another large group of people who are under employed. There are two meanings to this. The first and most commonly recognized is those who are working part time but want full time and those who are working below their expertise. Evaluating the last part is a bit tricky. A guy or gal who is trained and has worked as civil engineer but is flipping burgers is obviously under employed. Then there are the millions of college educated who hold economically worthless degrees and are flipping burgers. Are they underemployed or just dupes of the Education Establishment? That is a political question and I am not going there. All of these people are counted as employed, even though each situation is a waste of human capital. If the college grad quits their burger flipping job and moves in with mom and dad, they are out of the labor force and not counted as unemployed. 

The point of this is that we have been in a recession since the housing bubble collapse of 2008. Millions of people have not been able to find a job and quit looking for work. When they quit looking they have removed themselves, officially, from the labor market which by definition takes them out of both the denominator and numerator of the enemployment rate calculation which decreases the reported unemployment rate. That rate gets reported and the gullible think all is well when in fact the situation is getting worse.

All is not well. The best indication of that is to look at the version of the unemploymnet rate that captures those who have left the labor market, that is, have quit looking for work. This figure, while available, is seldom reported and never touted by the Administration in power. Another indicator of the same thing is the labor participation rate, which has fallen for the past several years. That is an indication of the discouraged part of the work force, and it is millions of people.

This country is still in a recession. The 'happy' unemployment figures reported by the administration and the media are an artifact of how they are calculated, which was fine in the 1950's and 1960's where one either had a full time job or nothing and where work was available to all those who wanted to work and had at least a modicum of skill. Those days are long gone and the typically reported unemployment rate does not capture today's reality.

If you do not think this county is in a recession, you must be in the 1%, working for the government, or living in the District of Columbia economic bubble.

Mac McCulloch

 

I'm pretty sure that one reason the labor force participation rate is going lower is because of the large number of baby boomers who are retiring and thus leaving the labor force.  That number is reflective of demographics more than anything else and is most definitely not the result of anyone in gov't cooking the books; it would be declining no matter who is President.

In a world still suffering the after-effects of the Great Recession, I think the American economy is doing about as well as can be expected.  If austerity is not producing the desired and promised results in Europe, and our GOP Congress won't use the tools Lord Keynes prescribed, then I think it's no wonder the world's economies are stalling out.

Any suggestions?

 

 

 

[n012944]

CSX's CEO: 'We're in a freight recession”

http://www.bizjournals.com/jacksonville/news/2016/01/13/csxs-ceo-were-in-a-freight-recession.html?ana=yahoo

[tpatrick]

I am told that NS has furloughed many if not all of last years new hires. Their prospects of reemployment are not good. Does anyone know of the situation at other railroads? 

[Norm48327]

NKP guy

Any suggestions?

YES! Let's keep partisan politics out of the discussion.

[wanswheel]

Could PTC deadline hoopla spook shippers to rely on trucks?

[switchlist77]

Honestly speaking, there's nothing to ship. I haven't seen it this slow since 2008. We've cut half of the transfer jobs at proviso, receiving yard is always empty. I saw it coming four years ago. Currently there are just over a hundred guys furloughed on the Illinois side, same for Wisconsin and maybe 70 or so in the CFT. It's not looking any brighter. Z trains leaving global 1 with two tubs doesn't raise an eyebrow anymore. 

[rrnut282]

Norm,

Pervious efforts to keep politics out chilled the free flow of thought on this forum.  It's part of the reason 'it seems slow around here'.

WWheel,

It depends if trucking has gained proportionally to the drop in rail traffic.  I do not know where to find the exact numbers for comparision, but someone else here might.

[tree68]

A lot of politics has to do with how one chooses to see the glass.  Is it half full, or half empty?

And most politicians will argue endlessly that their viewpoint is correct, even if they're saying the same thing the other guy is, but a different way...

I'm aware of a lad who just finished his conductor training with one of the Class 1's.  Instead of a graduation certificate, they handed him (effectively) a pink slip.

[Norm48327]

[quote user="rrnut282"]Pervious efforts to keep politics out chilled the free flow of thought on this forum. It's part of the reason 'it seems slow around here

Mike,

Some posters like to post their views on the side they disagree with by abasing the opinions of others. Granted we can't dicsuss railroading without some politics as they relate to the subject but some posters go off on tangents that are not related to the subject.

[CMStPnP]

n012944

CSX's CEO: 'We're in a freight recession”

http://www.bizjournals.com/jacksonville/news/2016/01/13/csxs-ceo-were-in-a-freight-recession.html?ana=yahoo

He is an idiot.   I would rather hear what UP or BNSF CEO says.   I used to be invested pretty heavily in CSX  because they kept marketing themselves to Wall Street as the come back kid.    After 10 quarters with earnings flat and the CEO saying what a great guy he was and what a great team he had........I had it and dumped CSX stock.     Also, a heavy investor in UP stock and UP is usually a lot more honest.

So I am curious what the consensus is.   I suspect it is a short term reaction to Christmas spending and we will bounce back by the second half of 2016 but.....just want a little more input from folks before I jump to conclusions.

[CMStPnP]

NKP guy

I'm pretty sure that one reason the labor force participation rate is going lower is because of the large number of baby boomers who are retiring and thus leaving the labor force.  That number is reflective of demographics more than anything else and is most definitely not the result of anyone in gov't cooking the books; it would be declining no matter who is President. In a world still suffering the after-effects of the Great Recession, I think the American economy is doing about as well as can be expected.  If austerity is not producing the desired and promised results in Europe, and our GOP Congress won't use the tools Lord Keynes prescribed, then I think it's no wonder the world's economies are stalling out. Any suggestions?  

Have to agree with schlimm on this.   I am a staunch Republican on most issues and I am pretty sure FOX News has it partly if not entirely wrong.     For one, you can't keep 15-17 million and growing immigrants on the sidelines forever without impacting labor participation rates.   At some point you either need to replace that reporting hole with legal citizens or grant an amnesty.  FOX never mentions that illegal immigrant work is not in the employment or unemployment rates because they do not qualify for it in most cases.

Second you have to balance labor force departure with small business creation.   If I depart to start my own business in most cases where financing is concerned I cannot pay myself until my company turns a profit.   Likewise, I am not considered part of the labor pool unless I am paying myself wages.    Just want to let you know I was not part of the labor pool for the year 2014, precisely because I started a business that year and did not pay myself salary per the stipulations of my finance package......so I was one of the folks that dropped out of the labor pool.   I am back in now.    There has been a dramatic increase in folks trying to start their own business because of reality TV shows like Restaurant Start Up, Shark Tank, etc on TV now that make it seem easy.    To be blunt it really is easy to start a business but lots of work to keep it growing.

Last but not least, folks were working before for health care coverage because they could not afford it for their kids or themselves otherwise.    With  Obamacare even with the steep deductibles of $6-8,000 a year.    If you can afford to pay the upfront costs of Obamacare you no longer have to work.    It is one of the unfortunate side impacts of the program......decrease in labor participation.

So fix the above three items........which is not really all that hard to do and I would be the first to predict that labor force participation rates return to normal.     The current statistic gathering method needs updating with todays realties.

Just remember that Sean Hannity only has a High School Diploma and so does not grasp a lot of the advanced Economic and Statistical facts some of us do that have at least a Bachelors degree do.   I'll take Seans opinions on Sports Teams but not listen to him on Business for that I go to FOX Business News.

[tree68]

CMStPnP

I suspect it is a short term reaction to Christmas spending and we will bounce back by the second half of 2016 but.....just want a little more input from folks before I jump to conclusions.

My conclusion as well, although I can't discount the possibility of a longer term trend.  I would suspect that a graph covering several years would easily show the short-term seasonal variations.  However, it would be the long term trend that would prove most informative.

[Euclid]

My sense is that the economy could bounce back big time in 2017.

[DSchmitt]

CMStPnP

FOX never mentions that illegal immigrant work is not in the employment or unemployment rates because they do not qualify for it in most cases.

From:  http://www.bls.gov/news.release/empsit.faq.htm

1. Why are there two monthly measures of employment?

   The household survey and establishment survey both produce sample-based estimates
   of employment, and both have strengths and limitations. The establishment survey
   employment series has a smaller margin of error on the measurement of month-to-
   month change than the household survey because of its much larger sample size. An
   over-the-month employment change of about 100,000 is statistically significant in
   the establishment survey, while the threshold for a statistically significant change
   in the household survey is about 500,000. However, the household survey has a more
   expansive scope than the establishment survey because it includes self-employed
   workers whose businesses are unincorporated, unpaid family workers, agricultural
   workers, and private household workers, who are excluded by the establishment survey.
   The household survey also provides estimates of employment for demographic groups.
   For more information on the differences between the two surveys, please visit
   www.bls.gov/web/empsit/ces_cps_trends.pdf.

 

2. Are undocumented immigrants counted in the surveys?

   It is likely that both surveys include at least some undocumented immigrants. However,
   neither the establishment nor the household survey is designed to identify the legal
   status of workers. Therefore, it is not possible to determine how many are counted in
   either survey. The establishment survey does not collect data on the legal status of
   workers. The household survey does include questions which identify the foreign and
   native born, but it does not include questions about the legal status of the foreign
   born. Data on the foreign and native born are published each month in table A-7 of
   The Employment Situation news release.