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While we have gotten several economic reports in a row that indicate the economy is stabilizing, if not starting to expand, there is one indicator of the real economy that is not budging, namely rail traffic.

The table below comes from Railfax, which tracks activity on the nation's rails http://railfax.transmatch.com/. It shows very little change in activity. Look at the 4-week rolling average (the weekly numbers can contain a lot of noise, the 4-week average smoothes them out) relative to the year-to-date numbers. For total rail traffic, there has been only a 0.2% difference in the year-over-year rate of decline, down 18.6% instead of down 18.8%.

The amount of rail traffic is not just important to the big railroads like Norfolk Southern (NSC - Analyst Report) and Union Pacific (UNP - Analyst Report). They are a measure of how much stuff is being shipped. If stuff is not moving, the economy is not moving. While there has not been that much improvement in overall traffic, there has been some positive (less negative) movement in most of the categories.

Six of the eight categories are showing lower year-over-year declines (note there are other things carried by rail that are not in one of the 8 categories shown, so some of that miscellaneous traffic could be down).

The major area of weakness is in intermodal traffic, which are the truckloads carried long distance by the rails and then transferred to 18 wheelers for final delivery. This tends to be the highest value cargo carried by the rails. It is also the area where rail competes most directly with trucks, and it is possible that the rails are losing share to the truckers.

There have been fairly dramatic improvements in other areas. Most notably in Autos, which on a year-to-date basis are down 49.6%, but, over the last four weeks, are down just 39.6% and the latest week (remember volatile from week to week so take with a grain of salt) down just 32.2%. This meshes with the success of the Cash for Clunkers program, and the much smaller declines in auto sales registered in July than earlier this year (an actual increase for Ford (F - Analyst Report).

The Food and Grain numbers could be a reflection of harvest conditions as much as final demand, but both are major U.S. exports, so the lower declines could be indicating some more improvement on the trade front.

Coal is largely used for producing electricity, and so far this has been a relatively cool summer, so I would not read too much into the minor deterioration in the coal traffic for the last four weeks relative to the year-to-date numbers.

The improvement in Metals shipments is noteworthy, since they are primary inputs for other products. If manufacturers are ordering more steel and copper than previously, it is probably because they are planning on making something with it. The alternative is that their inventories got drawn too low.

While the overall traffic number is essentially stable, and rail traffic down year over year in the high teens is pretty ugly, digging deeper in the numbers does show some signs of hope that things might be starting to get better, and, at least, it looks like things are no longer getting worse.

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