The trade group for the largest carriers in the U.S. freight railroad industry pointed to two months of weakened rail traffic and agreed with former Fed Chairman Alan Greenspan that the economy may be going through a “pause” in its recovery.
The Association of American Railroads issued the cautionary remarks in its latest monthly “Real Time Indicators” report. It does not go so far as to suggest the economy could be facing a return to recession conditions, but makes the point that softness in rail shipment volume reflects a broader cooling of commercial activity.
Noting that overall rail carloads -- of bulk materials, intermediate industrial products and large finished equipment – were lower in both June and May than the April levels, the report said “an economy several months into a recovery from the worst recession in decades should be yielding rail traffic levels heading north, not south.”
Average weekly June carload traffic at major U.S.-owned railroads was 283,126 units, the AAR said, down from 288,419 in May and from 294,758 in April.
Those declines, “have not been huge, and they certainly don’t prove that the wheels are coming off the economy’s bus,” said the report by the AAR’s economic staff. Yet while the report said the economy is much better than nine months or a year ago, it said the rail data is consistent with what Greenspan said in a July 8 CNBC interview – that the economy is “more than likely” undergoing a “pause.”
U.S. intermodal numbers continued to climb in June, but not enough for this time of year. The AAR said when it adjusts June rail hauls of containers and trailers for normal seasonal trends, the intermodal activity shrank 1.1 percent from May after three straight monthly gains.
Intermodal traffic figures list only loaded boxes and not their cargoes. However, the industry reports carload figures by commodity, and the AAR said the carload declines of the last two months are “spread across various commodities rather than concentrated in just one or two. That, too, is consistent with the view that the broad economic recovery has lost some of its vigor.”
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