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Following the transportation industry is one way to judge how the economy is doing.
Trucks and railroads pretty much move all the goods and raw materials that are sold or used in the United States. That is one reason investors keep an eye on the Dow Jones Transportation Index to get a feeling for how the economy is performing. Neither railroad traffic nor the Index are doing well recently.
The underlying economy is weaker than perceived when you look at March quarter’s GDP numbers and the recent employment report. And if the economy continues on this path it could enter a recession when few are forecasting one with one reliable indicator foreshadowing a downturn in the next 6 to 18 months.
Railroad traffic is lower than last year and getting worse
The Association of American Railroads or AAR tracks U.S. rail traffic and releases weekly, monthly and yearly data. Monitoring this activity provides another indication on how the economy is performing.
In its most recent release ending on June 1 it shows that total rail traffic is down over 2% year over year and has weakened as the year has progressed. For 2019 year to date year over year changes have been:
January: Up 1.1%
February: Down 0.2%
This article first appeared on www.forbes.com
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