Old news from January
http://www.bloomberg.com/news/articles/2016-01-11/bank-of-america-rail-traffic-is-saying-something-worrying-about-the-u-s-economy
“We believe rail data may be signaling a warning for the broader economy. Carloads have declined more than 5 percent in each of the past 11 weeks on a year-over-year basis. While one-off volume declines occur occasionally, they are generally followed by a recovery shortly thereafter. The current period of substantial and sustained weakness, including last week’s -10.1 percent decline, has not occurred since 2009.”
http://www.bloomberg.com/news/videos/2016-01-20/weak-rails-what-to-make-of-train-carload-volume-falling
Euclid MidlandMike Euclid, Early on you were clear that the downturn in rail traffic as a corollary to the economy was your personal opinion. After giving my personal point of view, which disagreed with yours, there was not much more to talk about. However, when you said "rail traffic levels are fine empirical evidence of economic performance" I could not take that to mean anything other than you thought the connection between the two was directly observable, or that you had built a scientific case for it. Railroads are a subset of transportation, and transportation is a subset of the economy, so the burden of proof is on you to show the direct connection. Some economist use rail traffic as one of a number of economic indicators, but that is still anecdotal evidence. I observe from stats that much of rail's loss of traffic can be accounted for by the major downturn in coal traffic, and to a lesser extent buy the loss of crude-by-rail. According to the Federal Reserve, while the economy may be slow growing, it is nevertheless growing. I also think I heard the term used (something like) "there are still pockets of weakness." Pockets of weakness? I would say there are oceans of weakness, and pockets of hope. The economy was growing at 1.2% at the end of last quarter and slowing. I expect it to be negative territory by the end of this quarter, and it may be there now. The fourth quarter is a major wild card. It will either signal recovery, or sharp decline into a second dip of recession. I think the connection between rail traffic levels and economic performance is indeed directly observable. That is why I called it empirical evidence. It can be empirical evidence while being my opinion. The fact that I believe it is empirical evidence does not require me to prove it to everyone else to their satisfaction. There is no burden of proof on me unless I take on the challenge of making everyone agree with me. Of course that would be impossible. That is why I said I regard everyone’s view on the economy as being their opinion just as I regard my own assessment. On what basis do you isolate the downturn in coal traffic and CBR from the performance of the economy? They may be artificially forced by regulation, but why should that mean that they don’t count when measuring economic performance? Regulations affect many facets of the economy. Also, it may be that some of the downturn in coal and CBR are directly related to a slackening of demand from the rest of the sagging economy rather than being repressed by regulation. I would certainly not dismiss the decline in rail traffic as being anecdotal evidence as might be considered to be based on small, insufficient sampling or hearsay. What is observable conveys large numbers that lead to obvious, observable conclusions. I take that as empirical evidence.
MidlandMike Euclid, Early on you were clear that the downturn in rail traffic as a corollary to the economy was your personal opinion. After giving my personal point of view, which disagreed with yours, there was not much more to talk about. However, when you said "rail traffic levels are fine empirical evidence of economic performance" I could not take that to mean anything other than you thought the connection between the two was directly observable, or that you had built a scientific case for it. Railroads are a subset of transportation, and transportation is a subset of the economy, so the burden of proof is on you to show the direct connection. Some economist use rail traffic as one of a number of economic indicators, but that is still anecdotal evidence. I observe from stats that much of rail's loss of traffic can be accounted for by the major downturn in coal traffic, and to a lesser extent buy the loss of crude-by-rail. According to the Federal Reserve, while the economy may be slow growing, it is nevertheless growing. I also think I heard the term used (something like) "there are still pockets of weakness."
MidlandMike
Euclid,
Early on you were clear that the downturn in rail traffic as a corollary to the economy was your personal opinion. After giving my personal point of view, which disagreed with yours, there was not much more to talk about. However, when you said "rail traffic levels are fine empirical evidence of economic performance" I could not take that to mean anything other than you thought the connection between the two was directly observable, or that you had built a scientific case for it. Railroads are a subset of transportation, and transportation is a subset of the economy, so the burden of proof is on you to show the direct connection. Some economist use rail traffic as one of a number of economic indicators, but that is still anecdotal evidence. I observe from stats that much of rail's loss of traffic can be accounted for by the major downturn in coal traffic, and to a lesser extent buy the loss of crude-by-rail. According to the Federal Reserve, while the economy may be slow growing, it is nevertheless growing. I also think I heard the term used (something like) "there are still pockets of weakness."
Pockets of weakness? I would say there are oceans of weakness, and pockets of hope. The economy was growing at 1.2% at the end of last quarter and slowing. I expect it to be negative territory by the end of this quarter, and it may be there now. The fourth quarter is a major wild card. It will either signal recovery, or sharp decline into a second dip of recession.
I think the connection between rail traffic levels and economic performance is indeed directly observable. That is why I called it empirical evidence. It can be empirical evidence while being my opinion. The fact that I believe it is empirical evidence does not require me to prove it to everyone else to their satisfaction. There is no burden of proof on me unless I take on the challenge of making everyone agree with me. Of course that would be impossible. That is why I said I regard everyone’s view on the economy as being their opinion just as I regard my own assessment.
On what basis do you isolate the downturn in coal traffic and CBR from the performance of the economy? They may be artificially forced by regulation, but why should that mean that they don’t count when measuring economic performance? Regulations affect many facets of the economy. Also, it may be that some of the downturn in coal and CBR are directly related to a slackening of demand from the rest of the sagging economy rather than being repressed by regulation.
I would certainly not dismiss the decline in rail traffic as being anecdotal evidence as might be considered to be based on small, insufficient sampling or hearsay. What is observable conveys large numbers that lead to obvious, observable conclusions. I take that as empirical evidence.
Apparently the Fed does not share your opinion of the economy, as they are indicating they may raise the interest rate sooner than later.
I understand that it is your opinion that rail traffic is directly connected to the economic conditions, but when the meaning of terms such as empirical evidence is now subject to your own opinion, those terms become meaningless.
I did not "isolate the downturn in coal traffic and CBR from the performance of the economy". I said "I observe from stats that much of rail's loss of traffic can be accounted for by the major downturn in coal traffic, and to a lesser extent buy the loss of crude-by-rail." I was only talking about aspects of rail traffic. Connecting that traffic to the economy would be a study in itself. The coal that formerly went to electric generation has been replaced by natural gas and renewables that don't go by rail. And looking at the latest data available from EIA (June 2016) total net electrical generation was up 1.7% from that month a year ago; natural gas consumption was up 9.1%; and coal consumption was down by -8.4%. In my opinion that puts a hole in your theory "it may be that some of the downturn in coal and CBR are directly related to a slackening of demand from the rest of the sagging economy"
http://www.eia.gov/electricity/monthly/update/
Finally, you seem to be conflating data and evidence. Figures that show decline in rail traffic are data, and I have no problem with their accuracy. However, using this data to infer a direct correlation with the economy is anecdotal evidence.
Midland Mike,
It would not surprise me if the Fed disagrees with me on several points.
When I speak of opinions, I do not consider the meaning of the terms, anecdotal evidence and empirical evidence to be subject to my opinion. The definitions of those terms are not my opinion, but the meaning of the evidence is. Say that someone looked out the window and observed that a train had only 78 cars when it usually has over 100 cars; and then concluded it must mean the economy is slowing down. I would consider that to be anecdotal evidence. I explained above my consideration of the thousands of parked locomotives by several companies which are all explaining that the reason is slow economic demand. I consider that to be solid, observable evidence, that is, empirical evidence rather than anecdotal evidence. In my opinion, the evidence means the economy is slowing.
I certainly have not redefined empirical evidence based on my opinion. It appears to me, however, that you have narrowed the definition.
But I don’t need slow railroad business to assess the economy. Just the GDP is sufficient for that. One percent growth rate is pathetic. As I suggested, you seem to be differing with me over something deeper than just the acceptable methods of measuring the economy. I take it that the “something deeper” is that you think the economy is doing well, and you interpret my comments as meaning that I think the economy stinks. This goes back to my original post where I said:
“It seems as if we have two economies these days. One hovers on the verge of recession and hampers consumer spending due a scarcity of jobs and falling wages. The other is experiencing a robust recovery, creating thousands of new, good paying jobs, and boasts the lowest unemployment in many years. Which of these is true depends on each person’s individual point of view. It can be fact checked, but there are enough published facts to support either viewpoint. So I see it as a personal choice.” Anyone choosing which economy to believe in will consider those holding the opposite view to be wrong.”
I think the reason for this “two economies” is obvious. There are many who are not just content to dispense or hear the economic news. Instead, they want to convince others what to conclude by it. There is great power to be had from causing people to believe that the economy is great shape, especially when approaching an election
Another reason is that the economic assessment is somewhat of a self-fulfilling prophecy. So telling people that you believe that the economy is weakening causes fear in those people that makes them reduce their economic risk. This then does indeed slow the economy. This is why when you ask a businessman how the business is doing; he will always say it could not be better even if he is having his worst year ever. And you never want to tell a customer that business is slow because it gives them an advantage in dealing on the price.
Therefore, I believe that most economic reporting is affected by self-serving spin.
To your points about coal and oil, I am not sure why you brought this up in the first place. I cited low levels of rail traffic, and you seem to say that rail traffic is not a reliable indicator of the economy. But then you go ahead and add that a significant part of the low rail traffic is due to less traffic of coal and crude oil. I took that to mean that rail traffic is not reflecting the economy as much as it appears to be because a big part of the downturn is coal and oil traffic—as if somehow they don’t count in the low rail traffic affecting the economy.
I checked the forum one last time before turning in for the night. I've got to get up early for my volunteer job tomorrow, at Habitat for Humanity, so I have some idea that there are people out there who are in economic distress. There certainly are pundits who put all different spins on their assessment of the economy. That's why I tend to put more trust in the Fed and other groups that represent varied political and intellectual points of view, and arrive at their conclusions after a more deliberative process. I don't put much credence in bloggers.
Yes, long lines of stored locos are observable evidence. They are evidence of a lot of idle equipment. Only by knowing that there is not an equivalent amount of horsepower to replace it, could we then deduce that traffic was down. We have all seen the data to show that rail traffic is down. However, without plausable arguements to show correlation, that is still anecdotal evidence with relation to economic trends. I bring up coal because that traffic is off about 30%, and crude-by-rail has fallen off the charts, so that must be taken into account as a significant contribution to lower rail traffic. As I have shown before, net coal has been replaced by gas in the power generation economy, and oil goes by pipeline or water, and you have not shown that merely its transportaion mode has some large effect on the economy.
I never said that 1.2% growth in the economy is great, but it is at least positive, and last I heard, was the best in the world. The fact that the economic rate is slightly positive, and the rail traffic totals are down by several %, brings me to the observation that present rail traffic is not a direct indication of economic trend.
The economy has over 300 million inputs (according to census figures). Let's just say that I am skeptical that you, or anyone else, can directly observe that activity.
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