Railroad Recession = National Economy

[CMStPnP]

schlimm

Railroad caroadings are NOT a leading, lagging or coincident indicator.

Rather interesting declaration because....

Federal Reserve treats them as a leading indicator.

All Big Three automotive Companies treat them as a leading indicator.

Most of the larger banks treat them as a leading economic indicator.

As I said before, they are not THE leading economic indicator but are treated as one in a basket of leading economic indicators.    It is rather surprising to me in a forum that should be supportive of the railroad industry so many people doubt that it is still a MAJOR industry in the United States.    If you were to ask to rank in importance the list of leading economic indicators, rail carloadings would not be at the top but they would still be in the basket.

We can debate this issue until the cows come home but Sorry folks, I supported the GM Economics Staff, attended more than one lunch at the Detroit Economic Club as well as lunched with one of the producers of the Chicago Fed's Beige book.    Worked in support of PhD Economists for three years on the GM Economics and Market Analysis Staff.    BTDT and seen the indicator myself.

 As much as everyone wants to prove the fact wrong......it's a fact and well beyond the preponderance of the evidence presented, in my opinion.    Railroad carloadings are one of the leading economic indicators used by most Economists today.     Now if you want to really disprove it then get a significant Economist with credentials to match to back you up.    Versus, "this is how I think the world should work."

Other measures were also used such as money supply, projected interest rates, exchange rates forecasting, consumer sentiment surveys from University of Michigan, Demographics from the Census Bureau, Housing starts, and more.

However, if railroad carloadings were as unimportant as people here seem to think, GM never would have paid for them in a data subscription, they would never appear in appendices of the Beige Book, nobody would mention them at the Detroit Economic Club. 

[tree68]

dakotafred

More than laws, the problem is mission creep by ambitious agencies to whom a lazy Congress leaves the details.

It's not just federal agencies.  And many times the mission creep is because the need for the original mission has fallen off.  So a few new regulations create a new mission.

As a non-railroad example, many fire departments now provide some level of emergency medical services.  Why?  Because fires are off and there is the fear that the powers that be will look at all those firefighters and and all that equipment sitting idle much of the time and decide maybe they aren't needed, at least not at the level they currently exist.

It hasn't always gone well.  In many places fire and EMS are like oil and water.

This from a longtime firefighter/EMT.

[jeffhergert]

http://www.usatoday.com/story/money/columnist/2016/08/19/dow-transports-dark-signal-economy/88988736/

Jeff

[dakotafred]

MidlandMike

 

dakotafred

Yes, Mike, but don't neglect the cumulative effect as reg is added to reg over 40 years and standards are tightened, often unrealistically. A good example is Washington's attempted expansion of its Waters of the United States jurisdiction to include practically every farmer's stock pond.

 

 

 

 

I have heard those clames by ag interests, and I have also heard the regulators say that the law won't do that (it's hard to enforce a regulation that you are on record saying it won't happen).  In my career (oil industry) I have seen the ebb and flow of regulation as it responds to the political process.

 

 

More flow than ebb, I'd say. And the regulatory era got under a real head of steam, with Teddy Roosevelt, only 100 years ago. Imagine the cobweb of regulation with which we'll be contending in another few hundred years (if the U.S. is so lucky as to still be in business).

 

More than laws, the problem is mission creep by ambitious agencies to whom a lazy Congress leaves the details. As when the EPA decided carbon dioxide, the very staff of life on this planet, is a pollutant and subject to the Clean Air Act.

 

Hard to enforce when you've said it won't happen? How about: You won't lose -- "you can keep" -- your doctor?

[MidlandMike]

dakotafred

Yes, Mike, but don't neglect the cumulative effect as reg is added to reg over 40 years and standards are tightened, often unrealistically. A good example is Washington's attempted expansion of its Waters of the United States jurisdiction to include practically every farmer's stock pond.

 

I have heard those clames by ag interests, and I have also heard the regulators say that the law won't do that (it's hard to enforce a regulation that you are on record saying it won't happen).  In my career (oil industry) I have seen the ebb and flow of regulation as it responds to the political process.

[CMStPnP]

dakotafred

Yes, Mike, but don't neglect the cumulative effect as reg is added to reg over 40 years and standards are tightened, often unrealistically. A good example is Washington's attempted expansion of its Waters of the United States jurisdiction to include practically every farmer's stock pond.

Or if you wanted to be more topical to this Magazine Forum look at the sheer number of Federal Regulations in regards to what is allowed on a Passenger Car in daily operation that were passed between 1968 and 1980.     Mentioned it before on why the Milwaukee Road's passenger fleet was quickly retired by Amtrak.    I am sure the non-standard trucks also played a role but it had more to do with how the cars were engineered as well.     Apparently OK for 110 mph operation in the 1940's and 1950's but unsafe for 55-70 mph operation in the 1970's without a significant and costly upgrade per car.

[Norm48327]

greyhounds

The truck rates are being forced down due to lack of demand for trucking services. This, in turn, is forcing intermodal rates down.

Definitely lack of demand. I'm seeing gravel trains being pulled by tractors with sleeper cabs. That tells me those truckers are hurting for work.

[greyhounds]

Here's some information on how trucking is doing:

http://www.logisticsmgmt.com/article/truckload_and_intermodal_pricing_declines_remain_in_effect_for_july_says_ca

The truck rates are being forced down due to lack of demand for trucking services.  This, in turn, is forcing intermodal rates down.

Grim.

[dakotafred]

Yes, Mike, but don't neglect the cumulative effect as reg is added to reg over 40 years and standards are tightened, often unrealistically. A good example is Washington's attempted expansion of its Waters of the United States jurisdiction to include practically every farmer's stock pond.

[MidlandMike]

Euclid, for historical perspective, I look at the environmental protection record of the last 50 years.  Industries said it would wreck the economy, and yet the economy went chugging along to new highs.  Clean energy may well go the same pattern.  If it doesn't, then I see an historical precedent in the recent PTC saga.  The PTC law was passed with the thought that it could be implemented by the deadline.  When it was obvious that the goal was too ambitious, the law was changed to a more pratical schedule.

[Euclid]

MidlandMike

 

Euclid

...

Regarding your speculation that not many mainstream elected officials buy into it, I think far more elected officials buy into it than the ones who don’t.  ...  

 

 

 

Politicians are adept at expressing their concerns for the variety of their constituents problems, but they can only act on one set of solutions.  Sometimes legislators will introduce bills that have no chance at passing, seemingly to show their base that they are trying.  My thoughts on whether elected officials buy into degrowth, is based less on speculation, and more on observation that they don't pass laws that are actually directed at economic contraction.

Here is an article in the mainstream press as to why degrowth does not work:

http://www.nytimes.com/2015/12/02/business/economy/imagining-a-world-without-growth.html?_r=0

As I understand it, the article that you linked above analyses two different methods to prevent the destruction of the planet.  One is Degrowth and the other is to replace fossil fuels as advocated by the Green Movement.  The article concludes that the former is too extreme to work in the developed world, and so the reasonable and workable method is to replace fossil fuels.

As to the conclusion that Degrowth won’t work, I completely agree.  I hope you did not perceive that I was advocating Degrowth when I brought it up.  In any case, unlike the article, I believe that just replacing the use of fossil fuels will also cause substantial slowdown of growth, although maybe not as extreme as full Degrowth ideology. 

Initially at least, the development of renewable energy will be raising the cost of living.  The cost increase will then force a rationing of energy, and together these effects will impose a huge drag on the economy.  There seems to be a naiveté in the Green Movement that if we just “invest” in new technology we will acquire it.  In other words, if we want it, we can have it if only we invest.  Yet there are plenty of technological development fronts that are at an impasse and do not yield just because you throw money at them.

But the article seems to ignore this impediment, concluding that Degrowth will not solve the climate problem but renewable energy will.  I don’t think either one of them will solve the problem as it is defined.  I also disagree that the problem actually exists in the first place. 

And just because Degrowth is thought to be unworkable by the article, that does not mean that elected officials will not pursue it.  Degrowth can be an objective that is approached gradually.  Actually, it includes the Green Movement which advocates the replacement of fossil fuels with renewable energy.  Degrowth is just the next stage higher than the Green Movement.  They have far more in common than what separates them.  One main difference is that Degrowth admits that it opposes capitalism.

Definitions:

Green Movement:

A popular movement urging production and use of environmentally harmless consumer goods. Green politicians would curb economic and population growth and protect the natural environment.

Degrowth:

A political, economic, and social movement based on ecological economics, anti-consumerist and anti-capitalist ideas. 

[Miningman]

I agree with BaltACD...that the next recession is underway. It can be seen and felt, just look around and believe your eyes and ears. Civil unrest rising with some pretty pathetic excuses as well another indicator. It's going to be rough for a while. These days though it just seems far more manipulated and deliberate rather than a natural market force. 

[schlimm]

It's not my choice. I was simply pointing out a fact.  The Conference Board sets the criteria for what is included in the accepted definition.  Carloadings are important indicators also, but are not one of the accepted leading economic indicators.

[BaltACD]

schlimm

The ten components of The Conference Board Leading Economic Index® for the U.S. include:

Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
ISM® Index of New Orders 
Manufacturers' new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index™
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions

Railroad caroadings are NOT a leading, lagging or coincident indicator.

While they may not be on your The Conference Board Leading Economic Index® they are still considered at leading economic indicator in that most raw materials that underpin the items listed in the conference board are shipped by rail.  If building products aren't being shipped, nobody is securing building permits.  The manufacture of consumer products requires raw materials for their manufacture and many of those materials move by rail.  

[schlimm]

The ten components of The Conference Board Leading Economic Index® for the U.S. include:

Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
ISM® Index of New Orders 
Manufacturers' new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index™
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions

Railroad caroadings are NOT a leading, lagging or coincident indicator.

[schlimm]

It is also necessary to consider the current economic conditions in other nations. Many are stagnant or slumping.  The US economy, like it or not, is very much a part of the global economy.  And the rails are not immune.

[BaltACD]

chicagorails

the economy grew at a terrible 1 percent this last qtr. week 32 railroad traffic -last week- down 10 percent. worst recovery since 1949. better stock up on food and water.........

Railroads have historically been a leading economic indicator.  With that being said and with rail traffic having been in serious decline for the past year - I think one can safely say 'the recovery' is over.  While this may have been the worst recovery since 1949, it followed what may have been the worst recession to have happened since that same year.  With companies announcing bankruptcies, store closings and layoffs - the next recession is now underway.  What the future will hold????

[chicagorails]

the economy grew at a terrible 1 percent this last qtr. week 32 railroad traffic -last week- down 10 percent. worst recovery since 1949. better stock up on food and water.........

[PJS1]

Victrola1

Rail traffic data for the weekending 8-13-16. 

https://www.aar.org/newsandevents/Freight-Rail-Traffic/Documents/2016-08-17-railtraffic.pdf 

Do you have to be an AAR member to get this information?

[MidlandMike]

Euclid

...

Regarding your speculation that not many mainstream elected officials buy into it, I think far more elected officials buy into it than the ones who don’t.  ...  

Politicians are adept at expressing their concerns for the variety of their constituents problems, but they can only act on one set of solutions.  Sometimes legislators will introduce bills that have no chance at passing, seemingly to show their base that they are trying.  My thoughts on whether elected officials buy into degrowth, is based less on speculation, and more on observation that they don't pass laws that are actually directed at economic contraction.

Here is an article in the mainstream press as to why degrowth does not work:

http://www.nytimes.com/2015/12/02/business/economy/imagining-a-world-without-growth.html?_r=0

 

[Shadow the Cats owner]

All I can say is what my boss just told me.  He told me to cancel all our major purchases for the next 18 months at a minimum.  Why our market that we are in has dropped to about nothing and we have 2 choices cut cuts or go out of Business.  He survived the recession in 2008 by doing what he is doing now back then and knows he can get thru another one by doing the same thing.  Hoping I still have a job in 2 years.  I am under a contract for 2 years at a time and I just signed one that would require payment in full so I am not to worried.

[Victrola1]

Rail traffic data for the weekending 8-13-16. 

https://www.aar.org/newsandevents/Freight-Rail-Traffic/Documents/2016-08-17-railtraffic.pdf

[Euclid]

MidlandMike

 

Euclid

 

Midland Mike,

No, I did not quote the Club for Growth.  I quoted the Club for Degrowth.  ...    

http://clubfordegrowth.org/our_philosophy/

...

 

 

 

Oops!  My eye doctor gave me a new prescription for glasses, and maybe I should buy those new glasses.

I think you were indicating that the degrowth people were out in left field, and I agree with that.  I don't think that many mainstream elected officials buy into degrowth.

Midland Mike,

I understand.  I have gotten those two organizations confused too.  I assume that the Club for Degrowth is presenting itself as the alternative for the Club for Growth.

Regarding your speculation that not many mainstream elected officials buy into it, I think far more elected officials buy into it than the ones who don’t.  Degrowth may not yet be a well-known term, but there are many references available that clearly define it. If you read about its stated goals and principles, you are sure to find them instantly recognizable and well established.  Degrowth puts them under one heading for the first time, and it is remarkably unambiguous, as opposed to other familiar “Utopianism” banners that never call for sacrifice. 

Degrowth is empowered by the moral authority of the earth much like the right to prevent climate change by demanding whatever sacrifice is necessary.  But Degrowth is the umbrella or capsulation of the entire range of philosophy that includes all of the sacrifice presumed necessary to reorganize the world, protecting it not only from carbon dioxide, but from capitalism as well.  Degrowth takes this mission to the highest level of detail.  It is bitter medicine framed in the most perfect sugar coating for our times. 

http://theconversation.com/life-in-a-degrowth-economy-and-why-you-might-actually-enjoy-it-32224

But again, my only point in bringing up the Degrowth movement is to show that, incompetent policies notwithstanding, there is a large and respected set of reasons why leaders might actually be trying to slow down the economy.  

[jeffhergert]

Euclid

Here is an article that lists the stored, out of service locomotives on a variety of railroads.  The piece I linked to the original post cited the 292 U.P. locomotives in storage.  Apparently they have other storage sites as well.  This article says that about April of this year, the U.P. had 1,400 stored locomotives.  One year earlier, they had 475 locomotives in storage.  Other railroads show that same slowing economic pattern. 

http://www.progressiverailroading.com/canadian_pacific/article/Fleet-Stats-2016-Class-I-railroads-stored-more-locomotives-cars-in-Q2--48748

 

 

They have quite a few, mostly early GE wide cabs and SD60 models, stored in Missouri Valley, IA.  A couple look like they came right out of the paint shop.

Jeff 

[jeffhergert]

carknocker1

I have always noticed when the economy is good trains are longer and my more frequent and these days as you have noticed the trains are shorter and less frequent

 

Not always, at least in my area. Less frequent yes, shorter usually no.  When things slow down, manifest train lengths seem to grow.  There still can be a slow day, especially towards the beginning of the week in my area, when manifest lengths might be shorter.  Usually ours seem to be 10000' or more.  For a couple of our symbols, 9000' is short compared to better times when that would be long.

Those same symbols also in good times rarely do work at intermediate yards.  In tighter times they do, which also accounts for some of the longer train lengths and less frequent trains.  Part of the reason is when there is a lot of traffic, they may run a regular symbol to the intermediate point that can completely clear the main.  They can't afford to tie up a main track for an hour or two while a train picks up and/or sets out.  With traffic down, tying up a main track isn't so important and it means using one less crew.  

Jeff 

[Euclid]

Here is an article that lists the stored, out of service locomotives on a variety of railroads.  The piece I linked to the original post cited the 292 U.P. locomotives in storage.  Apparently they have other storage sites as well.  This article says that about April of this year, the U.P. had 1,400 stored locomotives.  One year earlier, they had 475 locomotives in storage.  Other railroads show that same slowing economic pattern. 

http://www.progressiverailroading.com/canadian_pacific/article/Fleet-Stats-2016-Class-I-railroads-stored-more-locomotives-cars-in-Q2--48748

 

[carknocker1]

I have always noticed when the economy is good trains are longer and my more frequent and these days as you have noticed the trains are shorter and less frequent

[MidlandMike]

Euclid

 

Midland Mike,

No, I did not quote the Club for Growth.  I quoted the Club for Degrowth.  ...    

http://clubfordegrowth.org/our_philosophy/

...

Oops!  My eye doctor gave me a new prescription for glasses, and maybe I should buy those new glasses.

I think you were indicating that the degrowth people were out in left field, and I agree with that.  I don't think that many mainstream elected officials buy into degrowth.

[CMStPnP]

Also, Chairman Mao had an inclination to stick with a single color with his pant suits instead of the color of the day approach.    

[M636C]

Miningman

Euclid quotes " Voluntary reduction through coerced legislation"

...now that is big brother "double speak"  ...very scary.

Our newly minted Prime Minister admires Mao. Erected a statue of him for our Chinese businessman to admire. Mao is the #1 murderer of all time. Keep pushing back against this garbage fellows. 

 

 

To be honest, I think Mao is up there with Josef Stalin and Adolf Hitler (and Hirohito?) but I'm not sure he gets the title. Hirohito must have accounted for nearly as many Chinese as Mao. Even the relatively benign current regime in China executes a lot of people without much publicity.

Our not quite so recent Prime Minister isn't noted for much other than one of the narrowest election victories on record after dismissing the Senate in hope of getting a better one and he seems to have failed at that.

But I don't think any national government has the sort of control they once had. They are all just corks bobbing along in a sea of international trade, influenced by financiers gambling on world markets.

I can go to the supermarket and buy Californian oranges for less than it costs the local growers to produce them. The huge container ships can ship anything anywhere for almost nothing and make a profit doing it.

Automobiles can be made in Thailand and shipped anywhere for a price less than it costs to make them in the USA. But you probably can't sell a USA made car in Thailand because it doesn't meet local regulations. But because Thailand is a poor country, it is granted tariff free status nearly everywhere. They make Fords, Hondas, Toyotas, anything you want. Not Korean cars like Hyundai and Kia yet, I think.

But nobody wants to pay extra for an automobile because it is built in the USA or Germany. A lot of Mercedes come from South Africa. It doesnt matter, the shipping is cheap.

There is no going back. But is not the USA government that is responsible for globalisation. It is the free market. No government, not even China, can stop the free market, as much as they'd probably like to. They depend on it as much as anyone else.

M636C