"Real" Economy Indicator Signals Recession
Does it feel like the economy is worse than many of the official government reports?
There’s a reason.
Because it is worse.
At least in terms of the real economy, meaning the trade of goods.
The real economy has been in decline for almost two years according to rail traffic data.
The real U.S. economy runs on rails.
About 40% of all long haul shipping is done by rail.
If rail traffic is up, so is demand for and production of goods.
If rail traffic is down, so is demand for and production of goods.
It’s probably one of the most accurate indicators of the health of the real economy.
And unlike other more popular indicators like employment and GDP data, it can be seen with only a few weeks lag.
If you want to see rail traffic, the American Association of Railroads (AAR) publishes regular rail traffic data.
The chart below is from the CalculatedRisk blog.
It features AAR rail traffic data over the last three years.
And it shows the rail traffic has been slowing for some time:
The chart is set up to show each year individually because rail traffic can be highly seasonal.
You can see two distinct peaks in the chart, autumn 2020 and spring of 2021.
Every other time period is lower than those.
Here’s where it shows the real economy is in trouble.
Every point on the chart in 2022 is lower than every corresponding point in 2021.
This is a troubling sign as it shows the real economy is down about 4% throughout the year.
That’s why the real economy feels far worse than the official government statistics.
