Good morning America, how are you?
Don't you know me I'm your native son,
I'm the train they call The City of New Orleans,
I'll be gone five hundred miles when the day is done.
There's going to be debate about the true health of the economy beyond today's jobs report as some will grasp at green shoots and "positive" trends while others lament at how long it's taking and how that in of itself is a red flag. Plus, the unevenness of this recovery is a cause for concern as well. I haven't heard anyone bring up the notion of a double dip recession after last summer's scare, and I don't think it's an issue right now because the economy is already built to last (memo to the White House). But the fragility of the economy can't be ignored. While we are on bended knees looking for and worshiping green shoots, we have to look at what the rumbling noise is that shakes the ground.
Despite Arlo Guthrie's ode to the death of the railroad, it's still the circulatory system responsible for our economic health. So it's important to take a look when one of those big freight trains rumbles down the tracks. News out from yesterday didn't clear up a lot of things from a macro level unless one is willing to make allowances.
"If you exclude carloads of coal and grain, which are down for reasons that have little to do with the state of the economy, rail traffic in February was encouraging."- AAR Senior Vice President John T. Gray.
The headline, however, was worrisome. Rail traffic declined 1.9% in February from a year earlier and fell 6.2% in the week ending March 3 from the year ago period. Okay, let's take a look at the pluses from the report as there were several.
Intermodal volume was up 2.4% from a year earlier and traffic is up 27 straight months. Intermodal is the transfer of goods from point of origin to destination using more than one mode of transportation. For instance, a container is placed on a truck that is lifted on a ship that puts it back on a truck that delivers it to a train. For many this is considered the best way to measure our economy, although its only 15% of total rail traffic.
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock