Warren Buffett was once asked which economic indicator he would choose if he were stranded on a desert island with access to only one set of economic statistics. There are lots of indicators out there — consumer confidence, inflation and unemployment.
But Buffett picked freight rail traffic. And for good reason.
“What we move is the economy. It’s the tangible economy,” said Ian Jefferies, CEO of the Association of American Railroads. “And so as the economy goes, rail goes. So when rail is doing well, it usually means the economy is running pretty strong.”
Right now rail is doing well, especially when it comes to intermodal train traffic, Jeffries said. That’s when products travel in containers from ship to truck or train.
“The highest volumes we’ve ever seen”
“For the first half of 2021 … intermodal traffic was the highest volumes we’ve ever seen,” he said.
Intermodal train traffic was up more than 17% from the first half of last year, Jeffries said. No surprise there, because train shipments fell off when the pandemic started, like the rest of the economy. But intermodal traffic was also more than 5% higher than in 2019, which was a good year. These intermodal trains are brimming with the imported products consumers are demanding.
“This is a good sign,” said Diana Furchtgott-Roth, a former deputy at the Transportation Department now teaching at George Washington University. “It’s a good sign first of all that people have money to spend. And second, it’s good that they have confidence to spend.”
So, the freight rail tea leaves are pointing squarely toward more economic growth, right? Actually, Furchtgott-Roth said that this year, it’s complicated.
Jammed ports can cause problems on the rails
U.S. ports are backed up with a traffic jam of ships full of imports. Because of that whole intermodal thing, problems at the ports can cause problems on the rails. Plus, shipments for the holidays are starting now.
It could take longer for imported products to reach store shelves, Furchtgott-Roth said.
“If we don’t have enough goods shipped by rail, if the congestion continues, the prices will be higher,” she said.
Freight rail also tells us about U.S. exports. Right now, rail shipments of grain are down. That’s kind of weird, since farmers are producing plenty, said Joseph Schofer, who teaches civil and environmental engineering at Northwestern University. Grain might also be caught up in the international shipping snag, he said, or maybe it’s a storage issue.
“If you don’t have enough storage, you can’t move product and the system slows down or freezes up,” he said.
Ore, metal and chemical shipments are up
Rail shipments of other raw materials like ores, metals and chemicals are up, Schofer said; they’re going to U.S. factories, which are ordering a lot of supplies right now.
“Because they have either expectations that they can sell more products, or they have firm orders for more products,” he said.
Either way, Schofer said, it’s a vote of confidence in the economy, pointing the way to more economic growth this fall. How much growth depends on COVID-19, of course, but also how long it takes to unclog the ports and sort out storage issues and other bottlenecks that could cut into the rail shipments the economy needs to keep humming.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
