Your statement is generally not supported factually.
Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs.
You probably don’t know but, Mexico and Canada (two countries associated with NAFTA) aren’t “overseas”. They both have land borders with the US.
Also, the way railroads make money is hauling stuff long distances over land. NAFTA increases the amount of traffic that railroads, particularly in the Midwest, haul, thus increasing their traffic. So if we are talking UP traffic, NAFTA is good because the UP is uniquely situated to participate in the traffic flows generated by NAFTA.
Easy to make fun of Chicago in the details, but tell you what, he has the flavor.
A temporary boost for the rails, while much of the rest of the economy and country rusts out? Big whoop!
I guess it depends on where you are. If you’re towards the top looking down, the economy is great. If you’re towards the bottom looking up, it’s not so rosy.
Jeff
I sure don’t see a great economy right now. On average, I would say that manufacturing has not been this slow in decades, if ever. I am not sure what shape construction is in, but apparently it is a lot better off than manufacturing. However, I have been told by people in the construction excavating equipment business that the bottom has just recently fallen out of sales. We need solid economic growth of GDP at 5-7% in order to get things to normal where people can get jobs, buy houses, and move up with a general sense of prosperity.
According to the Bureau of Economic Analysis, manufacturing in the U.S. fell by 3.9 per cent between 2014 and 2015. However, between 2008 and 2015, which is better for trend analysis, manufacturing output is up 8.8 per cent.
Construction increased 9.6 per cent between 2014 and 2015. It increased 4.2 per cent between 2008 and 2015.
First quarter 2016 Gross Domestic Product was up 3.3 per cent over the same period in 2015. The constant dollar increase - 2009 dollars - was 2.08 per cent. GDP increased 3.45 per cent between 2014 and 2015. The constant dollar increase was 2.42 per cent.
Although there are pockets of resistance, overall it appears that the U.S. economy is performing reasonably well.
The U.S. is a mature economy. It is not likely to see the dramatic increases in GDP or other output indexes that it saw from 1946 through the 1970s or the increases seen in emerging market economies.
As noted earlier, the big problem for the railroads is the substantial decline in coal mining and its impact on coal loadings, which across the board, according to the Wall Street Journal, account for an average of 20 per cent of rail revenues.
I’m in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Perhaps you are talking about income inequality, but that is a political subject that the moderators council us not to get into.
Good to hear a voice of reason, informed by useful, real data.
I don’t think Jeff was talking about income inequality. If income is involved, I would say that relates to the fact that the people who need jobs can’t find them. Maybe higher income people are not in such a dire need for a job. I thought that was his point.
I have an Economics Minor, can you either explain to me what a “mature economy” is or reprint the definition you are using please. Because the definitions I find do not match the United States:
Investopedia Definition of Mature Economy (Matches Europe but not the U.S.):
“A mature economy is the situation where the country’s population has stabilized or is in decline, and where the pace of economic growth has also slowed. A population has stabilized or is in decline when the birth rate is equal to or less than the mortality rate. A mature economy is characterized by a decrease in spending on infrastructure, and a relative increase in consumer spending.”
OR
Financial Dictionary definition of mature economy (Again matches most of Europe but not the U.S.)
"A stable
Off topic - I used to let my 401k ride on the ups and downs of the NYSE in Mutual Finds a while back before I had the experience, time, and knowledge to actively invest and back when my principal was 5 digits or less. No longer though. Yes, you can make money that way investing and yes it is safer but the returns are much higher when you actively invest with individual stocks.
And the losses are much higher when you can’t accept the reality that you are no good at being an activest investor.
One can debate whether or not the US has a mature economy and that slower growth of GDP is structurally rooted and inevitable. The pertinent, non-debatable fact is that the rails’ downturn is primarily a consequence of lower "coal loadings, which across the board, according to the Wall Street Journal, account for an average of 20 per cent of rail revenues. ", as JBS1 said.
It is a political failure, if the result is something that was not wanted. It could be a political success if it is the result of policies that generally disdain capitalism while believing that robust economic growth is unsustainable, that it consumes too much of the earth’s resources, and deprives the rest of the world of their share of the pie. I have heard people who hold those beliefs also declare that this economy is the “new normal.”
As Slimm pointed out the rail downturn owing to the significant drop off in coal loading, is as Euclid mentions, the result of a desirable outcome by political forces. Great comments.
BaltACD- correct about investing…if you don’t know what you are really doing you will be picked clean by the pros in no time.
Strinking how all these great comments are all intrinsically linked and dependant on each other.
Thats not all of it, traffic is down across the board.
If you check Intermodal Growth rates they are still growing but used to be growing a LOT FASTER. They mention it on the investor calls as well, railroads would be well into double digit growth rates still with intermodal if the economy was doing better instead of permanently stuck in this funk. Yes the rails can get more creative with marketing.
Anyways, another reason I am putting my stock money where my mouth is. We get back to above 3% overall GDP growth rates and the rails will do pretty good again. It’s sheer stupidity to suggest we cannot hit 4-5% GDP Growth, though I would agree having above 5% growth is probably not sustainable for our Economy but it is also silly to accept 2%-2.5% or less as OK…thats crap. Only one political party is pushing that BS to explain the last 8 years.
Just to clarify, when I say that some are making excuses for a slow economy by saying that robust growth is unsustainable, I do not mean that they mean that the growth itself cannot be maintained due to the difficulty of achieving a high growth rate.
I mean that they mean that robust growth is damaging because it encourages what they regard as excess consumption and excess use of world resources. So I am using the term, sustainable as it is constantly used by the green movement. Limiting economic growth is a clear objective of the Degrowth movement. After all, it is in their name.
I believe this economy has a lot of pent up drive that has been thwarted over the last several years. A simple change in policy will unleash a powerhouse of economic growth. I think growth could surge to 10% almost overnight.
I am retired now, and if I listened to the financial gurus, I should be lessening my stock exposure. Continuing to ride the S&P 500 is excitement enough for me.
[quote user=“Euclid”]
MidlandMike
jeffhergert
MidlandMike
chicagorails
even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one caresYesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs.
I guess it depends on where you are. If you’re towards the top looking down, the economy is great. If you’re towards the bottom looking up, it’s not so rosy.
Jeff
I’m in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Perhaps you are talking about income inequality, but that is a political subject that the moderators council us not to get into.
I don’t think Jeff was talking about income inequality. If income is