Railroads say full steam ahead

Sep 09, 2010

The non-double-dip data point of the day is that rail traffic is still recovering.

Weekly rail carload volume set a 2010 high for the second straight week, the Association of American Railroads said Thursday. It said carloads on U.S. railways rose 7% from a year ago last week to 305,000.

The biggest gains were in intermodal traffic, the loads shipped both by train and truck, which rose 18% from last year. Metal and metal products volumes surged as well.

The report comes as economists and investors puzzle over the state of the economy. Growth clearly has slowed since the first half. The debate centers on whether this slowdown threatens a return to the financial instability of 2008 or simply amounts to a typical lull in a long recovery process.

The latest official voice to be heard is that of the Organization for Cooperation and Economic Development, which said Thursday that the recovery had slowed more than expected but was still likely to avoid slipping into recession.

The relative health of the U.S. railroad industry is no secret. Union Pacific and Norfolk Southern are trading within a few dollars of their 52-week highs. Berkshire Hathaway chief Warren Buffett explained his firm’s recent purchase of a third big train company, Burlington Northern, by noting the vast increases in productivity the railroads have made over the last few decades.

But a sign of how much ground the economy has yet to make up is also visible in Thursday’s release from the railroad association. It said rail volume for the first eight months of the year is up 7% from a year ago, but is still down 13% from 2008.

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