Freight Signals Strong Economic Activity

The uptick in freight suggests more robust economic activity ahead.

Here’s what’s up:

Both the Shipments and the Expenditures Indexes have now turned positive. 

Throughout the U.S. economy, there is a growing number of data points that suggest that the worst is over and the economy is getting better. Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong.

The 3.2% increase in the January Cass Shipments Index is yet another data point which strongly suggests that the first positive indication in October may have indeed been a change in trend.

In fact, it now looks as if the October index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun in earnest.

Data is suggesting that the consumer is finally starting to spend a little, and that with the surge in the price of crude (back above $50 in October), the industrial economy’s rate of deceleration first eased and then began a modest improvement led by the fracking of DUCs (drilled but uncompleted wells), especially in the fields with a lower marginal production cost (i.e., Permian and Eagle Ford). How fast will the recovery be from here? That is yet to be seen.

However, the overall freight recession which began in March 2015 appears to be over.

Tags: Freight., Shipments and the Expenditures Indexes

Category: Featured