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Rail Time Indicators

A Review of Key Economic Trends Shaping Demand for Rail Transportation

Policy & Economics Department Association of American Railroads Washington, D.C.

August 5, 2011

Rail Time Indicators is a non-technical summary of many of the key economic indicators potentially important to U.S. freight railroads. It is issued monthly by the Policy and Economics Department of the Association of American Railroads. Rail Time Indicators is free of charge. To get on the e-mail distribution list for Rail Time Indicators, send a request including your name and business affiliation, if any, to Beth Eagney at beagney@aar.org. If you have questions or comments about the content of Rail Time Indicators, please contact Dan Keen (dkeen@aar.org, 202-639-2326) or Shannon Stare (sstare@aar.org, 202-639-2322). All media inquiries should be directed to Holly Arthur (harthur@aar.org, 202-639-2344).

The last six editions of Rail Time Indicators are available on the AAR web site here.

Rail traffic data in Rail Time Indicators are sometimes presented on a seasonally adjusted basis and sometimes on a non-seasonally adjusted basis. Because of the nature of the AAR’s weekly rail traffic data and the nature of rail traffic (e.g., daily data are not available; some months have four weeks of data and some have five; holidays may be in one rail traffic month one year and in a different month the next; rail traffic varies by the day of the week; some commodity categories can exhibit wide swings in carloads from month to month for reasons unrelated to seasonal variations; the weather can have significant effects on traffic, etc.), the seasonal-adjustment process for rail traffic is not completely precise. Seasonally adjusted rail traffic data should be considered a complement to, rather than a replacement for, unadjusted rail traffic data. Copyright  2011 by the Association of American Railroads. Reproduction or retransmittal of Rail Time Indicators within a company for internal use is allowed, as is reasonable redistribution outside a company (for example, passing it on to someone you think might be interested in it). Unless approved by the AAR, reproduction or retransmittal for commercial use is prohibited except for short excerpts or quotations.

Uploading of Rail Time Indicators to a public web site is prohibited unless approved by the AAR.

Information in Rail Time Indicators is obtained from sources believed to be reliable. However, the Association of American Railroads makes no representations as to the accuracy or completeness of such information and assumes no liability for errors or omissions.

SUMMARY OF MOST RECENT DATA
Economic Indicator U.S. Freight Rail Traffic (p. 2) Most Recent Data Not Seasonally Adjusted: Carloads in July 2011  1.0% over July 2010; intermodal in July 2011  1.3% over July 2010. Coal and grain were down sharply, probably in part due to weather. Seasonally Adjusted: Carloads in July 2011  0.7% over June 2011; carloads excluding coal  3.2% in July 2011 over June 2011; intermodal in July 2011  0.8% from June 2011. Canadian Freight Rail Traffic (p. 5) Not Seasonally Adjusted: Carloads in July 2011  3.7% over July 2010; intermodal in July 2011  1.5% over July 2010. Seasonally Adjusted: Carloads in July 2011  0.6% over June 2011; intermodal in July 2011  1.2% over June 2011. Gross Domestic Product (p. 17) Purchasing Managers Index (p. 19)  1.3% in Q2 2011 according to the first preliminary estimate released July 29. Q1 2011 GDP growth revised down to 0.4% from 1.9%.  to 50.9 in July 2011 from 55.3 in June 2011 — lowest since July 2009. New orders  to 49.2 in July 2011 from 51.6 in June 2011 — lowest since June 2009. Manufacturing sales  0.2%, manufacturing inventories  0.2%, and inventory-to-sales ratio was flat in June 2011 compared with May 2011. Overall industrial output was  0.2% in June 2011 over May 2011; manufacturing output was flat in June 2011 compared with May 2011.  fractionally to 76.7% in June 2011, continuing a seven-month streak of virtually no growth.  117,000 jobs in July 2011 over June 2011. June 2011 job gains revised upward from 18,000 to 46,000.  to 9.1% in July 2011 from 9.2% in June 2011. First decline after three straight monthly increases.  1,818 employees in June 2011 over May 2011 to 159,340.  to 59.5 in July 2011 from 57.6 in June 2011.  0.1% ($534 million) in June 2011 over May 2011.  to 12.2 million (annualized) in July 2011 from 11.5 million in June 2011. Was 13.4 million as recently as February 2011.  14.6% in June 2011 to 629,000 from 549,000 in May 2011.  0.2% in June 2011 over May 2011; first decline in a year. “Core” inflation (which excludes food and energy)  0.25% in June.  to 276,943 on August 1, 2011 (18.2% of the fleet), up 707 cars from July 1, 2011.

Manufacturing Inventories and Sales (p. 21) Industrial Production (p. 22) Capacity Utilization (p. 25) Employment (p. 27) Unemployment Rate (p. 27) RR Employment (p. 29) Consumer Confidence (p. 30) Retail Sales (p. 31) Light Vehicle Sales (p. 33) Housing Starts (p. 34) Consumer Price Index (p. 36)

Rail Freight Cars in Storage (p. 37)

Rail Time Indicators – August 5, 2011

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719 carloads originated in July 2010. Thus. iron and steel scrap (up 4.9%).S. Rail Traffic 6% 24% other words.438 carloads. -1% -2% -3% -4% -5% -6% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -4% -8% bars = GDP (left scale) line = rail traffic (right scale) -12% -16% -20% -24% Source: BEA. The report contains rail traffic data for the previous week. rail carload traffic fell on a year-over-year basis for 19 straight months from August 2008 through February 2010. When comparing year-over-year rail traffic. followed by the 1. June 2011 vs. Traffic = carloads + intermodal What are the latest numbers for U.682.557 carloads. In June 2011. information on what is 5% 20% inside the containers and trailers is not 4% 16% available. freight railroads averaged 277. 12 of the 20 carload commodity categories tracked by the AAR saw increases compared with July 2010. AND CANADIAN FREIGHT RAILROAD TRAFFIC Who releases it and when?  The Association of American Railroads (AAR) releases its Weekly Railroad Traffic report every Thursday morning. down 1. 2011 Page 2 of 37 . June 2010) while seasonally adjusted rail traffic is compared on a month-over-month basis (e.S.g.. railroads?  On a non-seasonally adjusted basis. 14 categories saw increases (see table next page). U. intermodal is not included in carload figures. non-seasonally adjusted rail traffic is compared on a year-over-year basis (e. June 2011 vs.623 carloads. In % Change in U.S. A unit of rail intermodal traffic is either a shipping container (currently about 85% of U.  What is it and why is it important?  AAR rail traffic data are reported as carloads or as intermodal units. In July 2011. rail intermodal traffic) or a truck trailer (about 15% of intermodal traffic) carried on a railroad flat car. down 11. especially of the “tangible” economy.122. Unless stated otherwise. rail data herein should be assumed to be not seasonally adjusted.111.1% over July 2009’s 269.680 carloads per week and up 3.S.S.0% from July 2010’s 280. and then rose for 13 straight months from March 2010 to March 2011. rail traffic is a useful gauge of broader economic activity. chemicals (up 5.037 carloads from the 1. or 32.g. etc.S. Rail traffic data in Rail Time Indicators are sometimes presented on a seasonally adjusted and sometimes on a non-seasonally adjusted basis. Moreover. 0% 0%  Freight railroading is a “derived demand” industry: demand for rail service occurs as a result of demand elsewhere in the economy for the products railroads haul. or 22. covered hoppers. tank cars. Total carloads originated in July 2011 were 1.999 carloads.S. Categories showing the biggest carload gains in July were metallic ores (up 6. commodity-level detail on intermodal traffic is not available. comparisons are to the period 52 weeks prior to the present period. July thus saw the biggest year-over-year monthly decline (and the second decline of any kind) in U... Railroads reporting to the 3% 12% AAR collectively account for around 2% 8% 95% of total U.0% decline in July.S. May 2011). GDP vs. In the monthly rail traffic data reported in Rail Time Indicators. Generally speaking. Carload traffic is classified into one of 20 different commodity categories (see the table on page 6 for a list) and is carried in a variety of rail car types (e.U. gondolas.9%). boxcars. Weekly data are aggregated into monthly figures in Rail Time Indicators.4%).921 carloads per week in July 2011. up 3. and primary metal products (mainly steel products.). or 9. AAR Percentages are year-over-year. July 2011 was the fourth straight month in which carload traffic closely tracked year-earlier levels. and Canadian freight 1% 4% rail traffic. rail carload traffic in 16 months.g. A very small decline in April 2011 was followed by two small increases in May 2011 and June 2011.   Rail Time Indicators – August 5.479 carloads per week (see the chart on the top left of the next page). U. or 4.5%).

but it is not possible to precisely Month 2009 2010 2011 quantify that impact.Average Weekly U.000 170.4%).S. 2011 Page 3 of 37 .S. are not seasonally adjusted.S.3%) from July 2010 (see page 9). Source: AAR % Change in U.S. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5. operations of CN and CP.7%).000 130. including coal traffic. or 5. including in North Dakota and the With Year-Over-Year Gains Missouri River Valley. Rail Carloads Excluding Coal From Same Month Previous Year: Jan. Rail Carloads: All Commodities (not seasonally adjusted) 360. U.S. Rail Carloads: All Commodities Excluding Coal Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 1 0 0 0 0 0 0 1 1 6 10 11 13 16 19 19 17 13 16 14 15 13 16 15 15 15 9 8 14 12   *Out of 20.330 (7. 2011 2008 2009 2010 2006 2007 2008 2009 2010 2011 Data are based on originations.3% over July 2010 and up 12.128 carloads.3% over July 2010. are not seasonally adjusted.745 carloads. exclude U.000 180.000 2011 2008 5% 0% -5% 300.S.July 2011 20% 15% 10% July 2011 was down 1. or 3.0% from July 2010 and up 3. Charts on the top of page 12 cover U. or 15. coal had by far the biggest decline among commodity categories.000 120.0%).000 140. 2006 . The table on page 6 has much more commodity-level data for July. U.000 320. Average Weekly U. and reflect revisions to original reporting.000 110. Excluding coal and grain. Excluding coal.000 150. 340. There’s no # of AAR Commodity Categories question that flooding. rail carloads in July 2011 were up 4.9% over July 2010.S.334 carloads. Source: AAR Weekly Railroad Traffic  In July 2011. just as in June 2011.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.S. rail carloads excluding coal for the past several years. and reflect revisions to original reporting.000 2006 (peak year) % Change in Total U. and reflect revisions to original reporting. waste and nonferrous scrap (down 2.000 2010 -10% -15% 2009 260.July 2011 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% 210.000 160. Coal carloads in July 2011 were down 37.000 190. Other commodities showing carload declines in July 2011 compared with July 2010 were grain (down 4. Rail Carloads From Same Month Previous Year: Jan.S.000 200. rail carloads in July 2011 were up 5. exclude U. are not seasonally adjusted. and grain mill products (down 1. Railroads* July. Source: AAR Weekly Railroad Traffic -20% -25% 2006 2007 2008 2009 2010 2011 Data are based on originations.S.000 280. operations of CN and CP. The charts below show what’s happened with U. 2006 . operations of CN and CP. Source: AAR 2006 (peak year) July 2011 was up 4.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.S.S.1% over July 2009.8% over July 2009. and reflect revisions to original reporting.S. negatively affected rail traffic in For U. exclude U. exclude the U. operations of CN and CP. rail carloads excluding coal and grain for the past several years.000 240.

000 2009 2010 2011 2008 60. crushed stone and gravel.S.8% in July 2011 from June 2011. its second straight such decline (see the top right chart on page 15.000 80. operations of CN and CP.S.S.July 2011 25% 2006 (peak year)  Average Weekly U. 5% 0% -5% -10% -15% -20% -25% 2006 2007 2008 2009 2010 2011 2011 2010 2009 Data are based on originations.3% over July 2010 and up 18. crushed stone and gravel.000 100.619 units) of any week so far in 2011. Rail Intermodal Traffic From Same Month Previous Year: Jan.) The first week of July 2011 — the week including July 4th — had the lowest intermodal traffic volume (192. and reflect revisions to original reporting. among other things).000 90. paper. This is consistent with relatively flat U. are not seasonally adjusted. autos. operations of CN and CP. and reflect revisions to original reporting.2% in July 2011 over June 2011. metal products.000 190.S. metal products. Weekly U.S.000 70. Avg. Data are weekly average originations for each month and exclude the U. and stone and glass products. 2006 . Pages 15 and 16 have more charts covering seasonally adjusted rail traffic.000 170.2% over July 2010 and up 21. rail intermodal traffic was down 0.649 intermodal trailers and containers in July 2011. metallic ores. exclude U. and stone and glass products (which includes cement. operations of CN and CP.525 units) of any week so far in 2011.000 110. an average of 223. 2011 Page 4 of 37 . Source: AAR Weekly Railroad Traffic 2006 2007 2008 2009 2010 2011 Data include chemicals. and stone and glass products. That’s the lowest year-over-year increase since January 2010 (see chart below right).724 units) over July 2010. Seasonally adjusted carloads excluding coal and excluding coal and grain were both up 3.July 2011 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% July 2011 was up 7.S. industrial production (see page 23) and capacity utilization (see page 25) over this same period. autos and auto parts. Source: AAR Weekly Railroad Traffic  On a seasonally adjusted basis.000 250. autos. The last week of July had the highest intermodal traffic volume (240.S.7% in July 2011 over June 2011 (see the top left chart on page 15).000 220. metallic ores. % Change in Total U.S.S. total U.000 200. paper. Rail Intermodal Traffic (not seasonally adjusted) 260. primary metal products (mainly steel).000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. metallic ores. The charts below combine a number of what could be termed “industrial” products: chemicals.000 240. Rail Carloads of Industrial Products From Same Month Previous Year: Jan. Carloads of this group of commodities have been relatively stable for the past five months (see chart below left).000 210.3% (11.S. railroads originated 895. Source: AAR Weekly Railroad Traffic 20% 15% 10% 2008 July 2011 was up 1. operations of CN and CP. Data are weekly average originations for each month and exclude the U. % Change in U. In addition to carload traffic. crushed stone and gravel.S.912 units and up 1.9% over July 2009.9% over July 2009. Rail Carloads: Industrial Products (not seasonally adjusted) 130.000 180.000 230. Source: AAR Weekly Railroad Traffic   Seasonally adjusted U. One can combine the various carload commodity categories in an almost infinite number of ways. Rail Time Indicators – August 5. U. rail carloads were up 0. paper.S.000 2006 (peak year) 120. exclude U.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data include chemicals. 2006 .

include CN and CP (including their U. Canadian carloads in July 2011 were higher in 13 of the 20 commodity categories compared with July 2010.898 carloads. The Canadian data include traffic from Canadian railroads’ U.000 70.S. while intermodal loadings were up 6. The table on page 6 has detailed commodity figures for Canadian rail traffic in July 2011.000 2007 2008 (peak year) 2011 % Change in Total Canadian Intermodal Traffic From Same Month Previous Year: Jan.000 50. carloads were up 2.S.5% over July 2010 and up 22. 2006 . an average of 49.2% over June 2011 (see the middle right chart on page 15).000 2009 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.9% over July 2009. % Change in Total Canadian Rail Carloads From Same Month Previous Year: Jan. Seasonally adjusted total Canadian rail carloads in July 2011 were up 0.6%).952 units) over July 2010.000 2011 2010 2006 (peak year) July 2011 was up 3. or 15. operations.662 carloads. Canadian railroads originated 298. 2006 . 50.000 2009 -15% -20% Jul Aug Sep Oct Nov Dec 34. That’s the highest weekly average for any July in history and up 1.000 46.S.0%) and coal (down 1. include CN and CP (including their U.7% (10. operations).1%). Commodities with gains in July included chemicals (up 5. and reflect revisions to original reporting.870 intermodal trailers and containers in July 2011. Source: AAR Weekly Railroad Traffic 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.000 38. 2011 Page 5 of 37 . operations). and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic  Canadian railroads also originated 199.625 carloads) over July 2010.2% (189.7% over July 2010 and up 23.July 2011 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35%  Avg.6% over June 2011 (see the middle left chart on page 15).322 carloads. In the first seven months of 2011. or 4.5% (2. include CN and CP (including their U.  Rail Time Indicators – August 5.581 carloads. and an average of 74.9% (57.742 per week (see top chart below left).1% over July 2009.967 carloads of freight in July 2011. or 14. Weekly Canadian Rail Carloads: All Commodities (not seasonally adjusted) 100.385 carloads. Source: AAR Weekly Railroad Traffic Average Weekly Canadian Rail Intermodal Traffic (not seasonally adjusted) 54. operations).1%).S.9% (432. up 23. and reflect revisions to original reporting.000 40. Intermodal traffic is not included in carload figures. operations).S. Source: AAR Weekly Railroad Traffic -25% 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.July 2011 30% 25% 20% 15% 10% July 2011 was up 1.039 carloads) over the first seven months of 2010. and reflect revisions to original reporting. up 3.000 80. include CN and CP (including their U. What are the latest numbers for Canadian railroads?  On a non-seasonally adjusted basis.899 units). The biggest declines were in motor vehicles and parts (down 1.2%).S. and lumber and wood products (up 1. metallic ores (up 5. total U.968 units per week.000 2010 5% 0% -5% -10% 42. Seasonally adjusted Canadian intermodal traffic in July 2011 was up 1.000 90.657 carloads) over July 2009. or 11. or 12.000 Jan Feb Mar Apr May Jun Data are based on originations. 60.

246 139. lubricating oil.724 -3.6% 10.405 41.053 11. and Paducah & Louisville.224 770.4% 4.135 16. sand Nonmetallic minerals (6) Stone.023 -796 1.178 26.0% 4.918 26.341 33.493 2. exclude U.4% 18.588 23.665 6.584 3.914 120. 2006 (peak year) 2011 2008 2010 2009 5% 0% -5% -10% -15% -20% -25% 2006 2007 2008 2009 2010 2011 Data are based on originations.4% 16.921 -11.460 112.5% 3.4% 2. animal feed. ground earths or minerals.7% -1.443 18. (7) Other Waste & nonferrous scrap (8) All other carloads TOTAL ALL CARLOADS Trailers Containers TOTAL ALL INTERMODAL Jul 2011 141.735 28.3% 14.053 39.1% 17. Lake Superior & Ishpeming.5% 11.flour. clay & glass prod.075 5.029 36.6% 21.437 9. copper ore.5% -1.7% -18. Year: Jan.430 70.064 37. 2006 .1% -5.871 31. (8) .373 14.397 78.128 -50 7.879 2. and reflect revisions to original reporting. grain Grain mill products (1) Food products Chemicals and petroleum Chemicals Petroleum & petr.6% over July 2009.3% 3.0% -7.9% 5. KCS.395 31.000 400.1% 8.623 2.212 23.324 473. RAIL TRAFFIC: JULY 2011* (4 weeks ending July 30.1% 136.649 Jul 2010 147.487 110.3% 1.8% 18.391 12. Rail Carloads + Intermodal Units From Same Month Prev.8% 4.229 625 15.925 Jul 2009 144. asphalt. crude sulphur.250 9.470 -384 1.633 4.scrap paper.S. ashes. etc.S. (7) . but some aluminum ore.952 39.7% -3.) (3) .518 -37.1% -11.748 16.122 37.0% 12. gravel.205 % Change '11-'10 '11-'09 -4. Source: AAR Week ly Railroad Traffic Average Weekly U. Birmingham Southern.727 -38.685 31.413 83.7% -6.000 600. operations of CN and CP.804 15. and reflect revisions to original reporting. exclude U.984 113.200 15. etc.590 7.phosphate (5) .616 13.932 15. rock.S. fuel oil.744 24.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. copper.000 575.000 525. rock salt. etc.064 37.367 587 -2.7% 20.849 9.7% -1.682 125.431 36.9% -15.862 94.077.920 632. are not seasonally adjusted.000 425.U.525 1.443 121.5% 5.672 6.primarily iron & steel.966 79.037 -2. Includes BNSF.000 450.687 40.9% Commodity Agricultural & food products Grain Farm products excl.866 18. DDGs.9% 1. Crushed stone.6% 16. Excludes CN's and CP's U. operations of CN and CP. etc. soybean meal. CSX.287 883.245 28. Florida East Coast.170 11. gypsum. clay.9% 1.597 511.0% -0.434 71.cement.569 132.215 22.950 16.2% -2. are not seasonally adjusted.1% -5.005 -35 -1.321 10.524 753. Source: AAR % Change in U. jet fuel.334 2.716 23.2% 8.444 (1) .1% 3.569 -1.604 1.414 14.3% -1. etc.329 3.988 63.809 109.523 4.5% 9.695 6.999 605 3.5% 22.7% 8.5% 55.156 -1.350 38.wood raw materials such as pulpwood and wood chips (4) . etc.138 11.309 73.S.111.547 2. 2011 Page 6 of 37 .389 23.1% 4.059 118.882 2.719 127.407 438 2.675 21.268 21. etc.806 510. products (2) Coal Forest products Primary forest products (3) Lumber & wood products Pulp & paper products Metallic ores and metals Metallic ores (4) Coke Primary metal products (5) Iron & steel scrap Motor vehicles & parts Nonmetallic minerals & prod.638 756.2% 5. (6) .097 32.076 126.184 1.016 -4.8% 16.0% -3.330 1. 2011) Difference '11-'10 '11-'09 -6.184 14.735 40.7% -7.504 30.745 -93 -1.crude petroleum and all products of petroleum refining (liquefied gases. NS.0% -1. operations.005 14. some aluminum.000 500.155 24.589 3.118 12.S. corn syrup.1% -3.000 550. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5.5% 32.185 13.763 30.325 28.3% -2.768 4. Rail Traffic: Total Carloads + Intermodal Units 625.994 -482 2.overwhelmingly iron ore. corn starch.4% 2.304 137.425 895.9% 7. construction debris.014 2.July 2011 20% 15% 10% July 2011 was flat compared with July 2010 and up 9.S.225 6. UP.926 23.901 142.8% 46.6% 18.0% 4.681 22. *Data are originations not seasonally adjusted.036 39. (2) .122.766 1.476 -541 -2.196 147.438 4.000 475.1% 23.557 1.

025 1.1% 1.2% 6.440 9.990 15.6% 23.954 2.4% 0.200 3.588 2.000 2011 2010 2009 2008 110.689 53. etc.804 22.3% 7.255 59.7% -5. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5. (7) Other Waste & nonferrous scrap (8) All other carloads TOTAL ALL CARLOADS Trailers Containers TOTAL ALL INTERMODAL Jul 2011 61.014 7.235 10. (2) . etc. 2011) Commodity Agricultural & food products Grain Farm products excl.phosphate rock.193 55.424 5. include CN and CP (including their U.000 2007 (peak year) % Change in Canadian Carloads + Intermodal Units From Same Month Prev.011 9.047 6. clay & glass prod.407 5.342 6. corn starch.581 310 -136 531 -1. asphalt.) (3) . animal feed.424 13. including their U.9% -4.2% 30.051 5.286 5.6% 9.214 2.840 339 2.310 6. corn syrup. Data are originations not seasonally adjusted.639 1.382 36.scrap paper. are not seasonally adjusted.215 71. crude sulphur.906 23.S.474 8.820 2.127 % Change '11-'10 '11-'09 -1.772 5.cement.944 27.4% -3. and reflect revisions to original reporting.287 7. operations).6% -4.8% -2.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.852 8.3% 86.385 1. (7) .0% 4.0% 1.898 979 -397 907 469 490 125 365 10. jet fuel.overwhelmingly iron ore. include CN and CP (including their U.840 32.155 14. 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.4% 10.2% over July 2009. ashes.070 11.6% 0.899 47.361 2.750 9.182 11.764 30.July 2011 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% 130.289 14.448 7.1% 0.9% 93.325 241.539 1.588 288.S.8% 63.0% 23.384 64.crude petroleum and all products of petroleum refining (liquefied gases. soybean meal. etc.696 41.010 19.7% -1.322 -169 6.000 120. etc.3% 36.127 3.750 37.0% 15.967 6. but some aluminum ore.918 Jul 2009 59.433 3.9% 108. Source: AAR July 2011 was up 2.036 4.686 3. gravel.7% 15.9% 22.5% 4.120 190.000 90.263 2.8% 8.795 2. ground earths or minerals. DDGs.4% 0.0% 10.2% 9.611 14.215 62 1.3% 45.3% 6. copper.4% -11.8% over July 2010 and up 23.855 6. etc. etc.059 29. (5) .194 17.730 34.657 -255 36.flour.456 45 33.521 13.149 29.2% -1.458 36.074 -143 356 12.2% 3.CANADIAN RAIL TRAFFIC: JULY 2011* (4 weeks ending July 30. clay. Crushed stone.5% 8.9% 4.876 5. gypsum.118 193. grain Grain mill products (1) Food products Chemicals and petroleum Chemicals Petroleum & petr.2% -8.139 5.099 28.625 -2 2. products (2) Coal Forest products Primary forest products (3) Lumber & wood products Pulp & paper products Metallic ores and metals Metallic ores (4) Coke Primary metal products (5) Iron & steel scrap Motor vehicles & parts Nonmetallic minerals & prod.639 5.5% 1.317 5.094 27. operations).3% -2.1% 14.2% 4.907 50.primarily iron & steel.813 10.798 196.7% 14.870 Jul 2010 62.751 9.144 5.214 10.305 8.1% 12. (8) .7% 9.924 36.5% 17. lubricating oil.071 11.290 781 2. Year: Jan.952 2.100 6.000 100.1% (1) . copper ore. (6) .1% 4.5% 25. 2011 Page 7 of 37 .149 1.170 38.625 30. etc. and reflect revisions to original reporting.174 6.953 298. construction debris. operations.5% 22.373 157. rock salt.566 17.752 199.8% -12.097 896 4. fuel oil.370 163.856 17.1% 0.1% 22.684 6.0% 10. some aluminum.112 5.4% -17.561 3.240 939 21 -722 -350 -372 57.1% 46. 2006 .662 110 -1.743 Difference '11-'10 '11-'09 -834 -888 35 453 -434 5.7% 11. sand Nonmetallic minerals (6) Stone.wood raw materials such as pulpwood and wood chips (4) .458 171 2. Source: AAR Week ly Railroad Traffic Average Weekly Canadian Rail Traffic: Total Carloads + Intermodal Units 140.770 1. *CN and CP.799 5.S.7% 0.916 36.

6% 14.wood raw materials such as pulpwood and wood chips (4) .309 49.080.scrap paper.342 964.054 53.372 44. and reflect revisions to original reporting. etc.overwhelmingly iron ore.215 38.497 -1.863 -457 4. and reflect revisions to original reporting.017 26.299 -1.3% -18.321 20.6% 13.8% 15.177 1.164 44.192 32.2% 1.164 506.219 1.319.633 -58 -675 -484 12.3% 19.940 13.222 1.8% 7. ground earths or minerals.656 541.000 700.) (3) .2% 109.188 19.4% 3.685 -322 2. (7) Other Waste & nonferrous scrap (8) All other carloads TOTAL ALL CARLOADS Trailers Containers TOTAL ALL INTERMODAL Jul 2011 203.S.437 34.451 206.2% 17. etc.778 40.843 Jul 2009 204.2% 9.893 31.551 456 21.002 70.095.crude petroleum and all products of petroleum refining (liquefied gases.268 17.293 17.6% 6.962 28.600 12.4% -1.000 550.S.261 43.6% 7.9% 13.000 725.163 120.509 1.000 625.4% 5.286 -412 -2.758 947.5% -6. rock salt.5% 5.592 81.313 114.544 37.9% -3.S.871 45.2% 1.2% 22. copper.302 5. 2010 2009 Data are weekly average originations for each month.813 5.702 181.154 735 5.232 1.468 180.538 18.1% 26.111 -834 2.263 -3.850 -5.0% -13.470 132. ashes.7% 16.0% 7.8% -2.323 17. Source: AAR Week ly Railroad Traffic Average Weekly U.098 72.000 675. animal feed.536 544.884 69.5% -1.471 12.969 91.6% over July 2010 and up 12.246 159. clay. *Data are originations and are not seasonally adjusted.030 14. corn starch. (6) .000 600.1% 0.365 28.092 14.234 44.894 917. corn syrup.9% 3.377 2.410. are not seasonally adjusted. (8) .551 16.1% 3. products (2) Coal Forest products Primary forest products (3) Lumber & wood products Pulp & paper products Metallic ores and metals Metallic ores (4) Coke Primary metal products (5) Iron & steel scrap Motor vehicles & parts Nonmetallic minerals & prod.315 27.5% 6.858 2.434 139.000 500.3% -3.715 2.604 109.399 15. + Canadian Rail Traffic: Total Carloads + Intermodal Units 750.2% -3. lubricating oil. etc.039 -1.000 650.169 72.665 81. fuel oil.416 17.908 149.203 42.000 525.5% 8.9% 18.334 11.521 45.649 12.049 174.519 Jul 2010 210.628 -38.187 Difference '11-'10 '11-'09 -6. Source: AAR Weekly Railroad Traffic % Change in Combined U.647 1.2% 13.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. sand Nonmetallic minerals (6) Stone. Crushed stone.032 3.389 33.3% 30.836 1. crude sulphur.597 425 2.424 115. etc.8% 49. 2011) Commodity Agricultural & food products Grain Farm products excl.786 48.766 14. copper ore.9% 66.543 93.039 3.979 16.332 % Change '11-'10 '11-'09 -3.3% 1.523 83.000 575.4% -0.8% 1.3% 19.512 17. construction debris. (5) . DDGs. jet fuel.866 21.411.935 193.8% 1.687 8.9% -2. etc. but some aluminum ore.399 14.209 3. asphalt.cement. soybean meal.0% -1. grain Grain mill products (1) Food products Chemicals and petroleum Chemicals Petroleum & petr. etc.649 131.755 160. 2011 Page 8 of 37 .1% 3. etc.508 -35.951 12.676 -1.7% -0.953 16.814 36.4% (1) .761 19. are not seasonally adjusted. Year: January 2006 .flour. (7) .5% -0.phosphate rock.568 31.235 32.847 11.478 1.784 20.425 4. AND CANADIAN RAIL TRAFFIC: JULY 2011* (4 weeks ending July 30.6% 7.7% -7.766 38.896 67.5% 3.580 915 3.7% 13.570 22. some aluminum.077 -2.911 35.293 789.192 1.224 127.1% 14.591 46.July 2011 20% 15% 10% 2006 (peak year) 2011 5% 0% 2008 -5% -10% -15% -20% -25% -30% 2006 2007 2008 2009 2010 2011 July 2011 was up 0.208 53. + Canadian Rail Carloads + Intermodal Units From Same Month Prev.1% 2.3% -4. gravel.552 22. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5.247 143.250 38.1% 19.283 178. clay & glass prod.085 1.1% over July 2009.061 133.COMBINED U.521 13.primarily iron & steel.727 4.4% 4.747 37. gypsum.982 149.7% 24. (2) .

000 2010 6. operations of CN and CP. 2006 .5% from July 2009.000 2010 2007 -5% 2009 2011 120.3% (37. include CN and CP (including their U.COAL U.351 carloads per week. railroads originated 473.1% for the month.000 115.000 8. exclude U.764 carloads. Average Weekly U.S. Source: AAR Weekly Railroad Traffic Avg. That’s down 7. totaling 32. Rail Carloads of Coal From Same Month Previous Year: Jan. and reflect revisions to original reporting.000 145.000 125.000 120. exclude U. 2006 . operations).000 2006 2007 2008 2009 2010 2011 Data are based on originations.4% over July 2009. and reflect revisions to original reporting.000 135.July 2011 155.S. an average of 118. Source: AAR Weekly Railroad Traffic Weekly U.000 4.000 110. Coal Carloads: 13-Week Moving Average January 2006 .000 2011 2007 % Change in Canadian Carloads of Coal From Same Month Previous Year: Jan.000 140. and reflect revisions to original reporting.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. are not seasonally adjusted. Rail Carloads of Coal 160.000 110.3% from July 2010 and down 7. Canadian rail carloads of coal were down 4. are not seasonally adjusted.July 2011 15% 10% 5% 0% 150.405 carloads of coal in July 2011.S. and the lowest average for any week since December 2009. Source: AAR -10% -15% -20% July 2011 was down 7. include CN and CP (including their U.000 2009 2008 -10% -20% -30% -40% 5.S.July 2011 60% 50% 40% 30% 20% 10% 0% July 2011 was down 4.5% from July 2009. The most recent utility coal stockpile data show that stockpiles are below where they were at the same time last year (see chart bottom right).000 130.1% from July 2010 and up 9. and reflect revisions to original reporting. operations of CN and CP. Weekly Canadian Rail Carloads of Coal 10. exclude U. are not seasonally adjusted. It’s likely that some of the decline is attributable to demand issues and some to flooding that has disrupted rail operations.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. operations of CN and CP.000 140.330 carloads) from July 2010. 9. Source: AAR Weekly Railroad Traffic Electric Power Sector Coal Stockpiles: 2007-2011 (Millions of Tons) 220 2009 200 180 160 140 2007 120 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Energy Information Administration 2011 2010 2008 Rail Time Indicators – August 5.S.S.000 150. operations).S.000 7. 2006 2007 2008 2009 2010 2011 Data are based on originations.S.S. Source: AAR 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month. down 7. and reflect revisions to original reporting. 2011 Page 9 of 37 .000 130. are not seasonally adjusted.000 2008 (peak year) % Change in U.

include CN and CP (including their U. 2006 .000 25.S. Source: AAR Weekly Railroad Traffic correlation = 70% Data are seasonally adjusted. AAR Rail Time Indicators – August 5. are not seasonally adjusted. are not seasonally adjusted. Weekly Canadian Rail Carloads of Chemicals 13.000 33. Rail Carloads of Chemicals 33.S. The chart on the bottom right shows the dramatic recovery in U. and reflect revisions to original reporting. and reflect revisions to original reporting.S.July 2011 33.S.464 carloads of chemicals per week in July.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. data prior to 2008 are not available.000 30.S. and reflect revisions to original reporting. operations).000 26. 2009 .000 24. Avg. Rail Carloads of Chemicals From Same Month Previous Year: Jan.000 28.000 2010 2011 % Change in Canadian Carloads of Chemicals From Same Month Previous Year: Jan.000 22.July 2011 20% 15% 10% 2011 2007 (peak year) 2010 5% 0% -5% 2009 2008 -10% -15% -20% -25% July 2011 was up 4. Industrial Production of Chemicals vs.000 30.7% in July 2011 over June 2011 (see chart on page 16).000 6.000 25. Jan.S.CHEMICALS U.000 29.000 2006 2007 2008 2009 2010 2011 Data are based on originations.6% over July 2010 and up 36.000 23. operations of CN and CP. 2011 Page 10 of 37 . rail chemical traffic since early 2009. Source: AAR 2009 July 2011 was up 15. Source: AAR % Change in U. exclude U.9% over July 2009. an average of 29.000 10.000 32. operations of CN and CP.000 23.000 27.000 27. Due to comparability issues. the third straight monthly all-time high (see chart middle left). include CN and CP (including their U.000 23.S.S. data prior to 2009 are not available.S. exclude U.000 8.S. Source: AAR Weekly Railroad Traffic Avg.000 29. Seasonally adjusted rail chemical traffic rose 0.S. 2010 2010 Data are based on originations. 2006=100) Rail carloads of chemicals (right scale) Weekly U.000 31.000 26. railroads originated 118. chemical carloads have now risen for 21 straight months (see chart top right).735 carloads of chemicals in July 2011. are not seasonally adjusted.000 29. Chemical Carloads: 13-Week Moving Avg.9% over year-ago levels. Weekly U. Source: AAR Weekly Railroad Traffic U.S.9% over July 2010 and up 8.000 24.000 19.000 31.000 27.000 12. Year-over-year U. Source: Federal Reserve. 2006 2007 2008 2009 2010 2011 Data are based on originations.000 28.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. Rail Carloads of Chemicals 110 105 100 95 90 85 80 75 2006 2007 2008 2009 2010 2011 Industrial production chemicals (left scale.July 2011 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% 2009 2008 9. and reflect revisions to original reporting. operations of CN and CP. Carloads are weekly averages.000 21.7% over July 2009.S. U.000 31.684 per week and up 4.000 11. are not seasonally adjusted. exclude U. Canadian railroads averaged 10. operations). Due to data revisions. and reflect revisions to original reporting. January 2006 . are not seasonally adjusted.000 32.000 25.000 7.

operations of CN and CP.7% from July 2009.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.7% from July 2010 and down 1. Source: AAR Weekly Railroad Traffic % Change in Combined U.5% over July 2009.July 2011 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% 2007 2011 2008 2009 2010 July 2011 was down 4.000 2011 2007 2008 -10% -20% 7.000 22.000 2009 16. are not seasonally adjusted.000 34.July 2011 30% 20% July 2011 was down 2. The chart on the bottom left of page 16 shows seasonally adjusted U.000 11.000 38. railroads originated 78. include CN and CP (including their U. operations).000 9.000 36. and reflect revisions to original reporting. Source: AAR Weekly Railroad Traffic Average Weekly Canadian Rail Carloads of Grain 12.000 2011 2010 10% 0% 20.GRAIN U. 10.S.S. grain carloads. Rail Carloads of Grain 28.7% from July 2010 and down 0. and reflect revisions to original reporting.000 24.S.S.S.000 30. which was only the second year-over-year decline in U. Good luck trying to make sense of the charts (middle row) showing Canadian grain carloadings. operations of CN and CP. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5. are not seasonally adjusted. are not seasonally adjusted.000 22. + Canadian Rail Carloads of Grain From Same Month Previous Year: Jan. Average Weekly U. which fell 12. and reflect revisions to original reporting.3% from July 2009.7% (4.000 32.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.000 26.584 carloads of grain in July 2011.5% in July 2011 from June 2011. exclude U. 2006 .S. are not seasonally adjusted. Source: AAR Data are weekly average originations for each month.S. Flooding in North Dakota likely played a role in July’s decline. include CN and CP (including their U.000 2009 10% 0% 8. Grain is among the major rail commodity categories with the most variability in carloadings. exclude U. 2006 . down 5. are not seasonally adjusted.S. grain carloadings since October 2009. and reflect revisions to original reporting. Source: AAR Data are based on originations.S.000 2010 % Change in Canadian Carloads of Grain From Same Month Previous Year: Jan.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -30% 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month. operations).000 2007 % Change in U.July 2011 30% 20% 26.000 24. + Canadian Average Weekly Rail Carloads of Grain 40.S. Rail Carloads of Grain From Same Month Previous Year: Jan. 18. 2006 .S.4% from July 2010 and up 0. Source: AAR Weekly Railroad Traffic Combined U. and reflect revisions to original reporting. 2011 Page 11 of 37 .000 2008 -10% -20% July 2011 was down 5.000 28.745 carloads) from July 2010. and reflect revisions to original reporting. 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.

operations of CN and CP.S.S.9% over July 2010 and up 19.S. exclude U.000 160. 2006 (peak year) 2011 2008 2010 2009 2006 2007 2008 2009 2010 2011 Data are based on originations. Source: AAR % Change in U. exclude U. and reflect revisions to original reporting.000 2010 2011 2008 5.000 100.July 2011 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% July 2011 was up 5.000 8. and reflect revisions to original reporting. are not seasonally adjusted. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5.000 140.000 2009 -40% -60% Jul Aug Sep Oct Nov Dec 2. exclude U.July 2011 120% 100% 80% 60% 40% 20% 0% -20% July 2011 was up 32. 2011 2007 2008 2010 2009 60% 40% 20% 0% -20% -40% -60% -80% 2006 2007 2008 2009 2010 2011 Data are based on originations. Year: Jan. are not seasonally adjusted. 6. are not seasonally adjusted and exclude U. Rail Carloads Excl.000 6. operations of CN and CP.000 150.000 130. are not seasonally adjusted. Source: AAR Weekly Railroad Traffic IRON AND STEEL SCRAP Average Weekly U. Rail Carloads of Steel and Other Primary Metal Products From Same Month Previous Year: Jan. 2011 Page 12 of 37 . 2006 .000 4.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.S.000 3.S.000 180.9% over July 2010 and up 16. Data prior to 2009 are not available.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.000 110. Coal and Grain From Same Month Prev. operations of CN and CP.5% over July 2010 and up 46.July 2011 100% 80% July 2011 was up 9. Data prior to 2008 are not available. operations of CN and CP.000 170.1% over July 2009. and exclude U. 2009 .ALL COMMODITIES EXCLUDING COAL AND GRAIN Average Weekly U. Source: AAR % Change in U.S.000 190.S. operations of CN and CP. and reflect revisions to original reporting. Rail Carloads of Iron and Steel Scrap 7.S. 2006 . exclude U.000 120.4% over July 2009. are not seasonally adjusted.S.S. operations of CN and CP.000 % Change in U.000 12. Source: AAR Weekly Railroad Traffic PRIMARY METAL PRODUCTS (MAINLY IRON AND STEEL) Average Weekly U. Rail Carloads: All Commodities Excluding Coal and Grain 200. Source: AAR -80% 2009 2010 2011 Data are based on originations.000 Jan Feb Mar Apr May Jun Data are weekly average originations for each month.000 4. Rail Carloads of Iron and Steel Scrap From Same Month Previous Year: Jan. are not seasonally adjusted. and reflect revisions to original reporting.000 2.3% over July 2009.000 10. Rail Carloads of Steel and Other Primary Metal Products 14.S.S.

Sand.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -80% 2006 2007 2008 2009 2010 2011 *Includes parts.S.July 2011 25% 20% 15% 10% 5% 0% 2008 6.) Average Weekly U.000 23.000 20. Source: AAR July 2011 was up 5.000 8.000 14.S.S. 2007 2008 20% 2011 2010 0% 2009 -20% -40% -60% Rail Time Indicators – August 5.000 32. Source: AAR Weekly Railroad Traffic % Change in Combined U. ASPHALT. Source: AAR Weekly Railroad Traffic *Includes parts. Source: AAR Weekly Railroad Traffic MOTOR VEHICLES AND PARTS Combined U. 2006 . 2009 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.July 2011 80% 60% 40% July 2011 was up 1. are not seasonally adjusted.000 2011 % Change in U.500 7. operations of CN and CP.500 5.S.000 2009 -5% -10% -15% -20% 2009 2010 2011 Data are based on originations.000 11. ETC. Rail Carloads of Petroleum and Petroleum Products From Same Month Previous Year: Jan. and reflect revisions to original reporting. FUEL OIL. 2006 . Rail Carloads of Crushed Stone. LUBRICATING OILS.S.July 2011 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% July 2011 was up 4.0% over July 2009. are not seasonally adjusted.4% over July 2010 and up 18. AND GRAVEL Average Weekly U.500 2010 6.000 17. and exclude U. + Canadian Average Weekly Rail Carloads of Motor Vehicles* 35.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 2010 2008 2006 (peak year) % Change in U.000 26. operations of CN and CP. and Gravel From Same Month Previous Year: Jan.S.000 18. exclude U.000 14. Sand. 2009 .7% over July 2010 and up 20. are not seasonally adjusted.S.000 26.S. Rail Carloads of Petroleum and Petroleum Products 7. and Gravel 28.000 10.000 8. are not seasonally adjusted. + Canadian Rail Carloads of Motor Vehicles* From Same Month Previous Year: Jan. are not seasonally adjusted.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month.000 22. Data prior to 2008 are not available. Source: AAR Weekly Railroad Traffic 5.S.4% over July 2009.000 29. Data are weekly average originations for each month.000 12. Source: AAR Data are based on originations. Data are weekly average originations for each month. CRUSHED STONE. SAND.2% over July 2010 and up 16.PETROLEUM & PETROLEUM PRODUCTS (LPGs. and reflect revisions to original reporting.000 20. and reflect revisions to original reporting.S.000 16. Rail Carloads of Crushed Stone.7% over July 2009. are not seasonally adjusted and exclude U. 2011 Page 13 of 37 . exclude U. Data prior to 2009 are not available. operations of CN and CP.000 24. and reflect revisions to original reporting. operations of CN and CP.

000 6. + Canadian Rail Carloads of Metallic Ores From Same Month Previous Year: Jan.000 2007 2011 % Change in Combined U.000 4.000 20. and reflect revisions to original reporting.S.July 2011 15% 10% 5% 0% 12.1% over July 2010 and up 12.1% over July 2009.000 14.9% over July 2009.000 14. 12.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. + Canadian Rail Carloads of Lumber and Primary Forest Products From Same Month Previous Year: Jan.000 10.S. + Canadian Average Weekly Rail Carloads of Pulp and Paper Products 14. 10.2% over July 2010 and up 2. and reflect revisions to original reporting. + Canadian Average Weekly Rail Carloads of Lumber and Primary Forest Products 16.000 2011 2008 2010 -5% -10% -15% July 2011 was up 1. 2006 . Source: AAR Weekly Railroad Traffic LUMBER AND WOOD PRODUCTS + PRIMARY FOREST PRODUCTS Combined U. are not seasonally adjusted. are not seasonally adjusted.000 22. are not seasonally adjusted. + Canadian Rail Carloads of Pulp and Paper Products From Same Month Previous Year: Jan.000 11.S.000 2007 % Change in Combined U.5% over July 2010 and up 109.6% over July 2009.000 10.000 2008 2011 2010 8.S. Source: AAR Weekly Railroad Traffic Data are weekly average originations for each month.July 2011 30% 20% 10% 0% July 2011 was up 7.000 -20% 2009 8. are not seasonally adjusted. and reflect revisions to original reporting.S.000 2009 -10% -20% -30% -40% 2006 2007 2008 2009 2010 2011 4.000 16. Weekly Rail Carloads of Metallic Ores 26.000 12. are not seasonally adjusted.S.000 24. + Canadian Avg.METALLIC ORES (OVERWHELMINGLY IRON ORE) Combined U. Source: AAR Weekly Railroad Traffic Rail Time Indicators – August 5. 2006 .July 2011 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% July 2011 was up 15.000 2007 % Change in Combined U. and reflect revisions to original reporting. and reflect revisions to original reporting. 2011 Page 14 of 37 . are not seasonally adjusted.000 8. and reflect revisions to original reporting.000 9. Source: AAR Weekly Railroad Traffic -25% -30% 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month. 2006 . Source: AAR Weekly Railroad Traffic PULP AND PAPER PRODUCTS Combined U.000 6. 2010 2008 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006 2007 2008 2009 2010 2011 Data are weekly average originations for each month.000 13.000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Data are weekly average originations for each month. Source: AAR Weekly Railroad Traffic Data are weekly average originations for each month.000 18.

2011 I u Page 15 of 37 5 .SEAS SONALLY ADJUSTED RA TRAFFIC AIL C Rail Time Indicators – August 5.

W p s t a e Rail Time Indicators – Au I ugust 5.Where to go for more information o e n:  Weekly AAR press releases on railroad traffic are ava ilable on the AAR web site here. 2011 Page 16 of 37 6 .

9% 3.1% 1.7% -0. Among the revisions: GDP growth for the first quarter of 2011 was revised downward from an already low 1. 2011 Page 17 of 37 .1% to 2. GDP growth in Q4 2010 was revised downward from 3. For example. That said.9%. take the percentage change in inflation-adjusted GDP from one quarter to the next and multiply by four.5%. The GDP figure that gets all the press is the annualized percentage change in inflation-adjusted GDP from one quarter to the next — i. meaning the current “soft patch” (as some are calling it) could turn into quicksand if.S.   U.6% 2.7% 1.6% 5. the economy contracted 3. The revisions noted above are part of an annual process.7% 0. say.0% -6.0% 1.9% -0.e. respectively.8% 2.5% 3. GDP and freight rail traffic have historically been closely correlated (see the chart on page 2).7% in Q1 2009 — much worse than the original estimates of -6.8% -4. GDP Growth: Q1 2004 – Q2 2011 (annualized % change from previous quarter) 6% 4% 2% 0% -2% -4% -6% -8% -10% 2004 2005 2006 2007 2008 2009 2010 2011 Q2 2011 reflects BEA's first preliminary estimate. The revisions show that the recession was deeper than originally thought.8% Revised 0. For all of 2009. which is saying something.9% to a truly abysmal 0.3%.. This estimate is subject to potentially substantial future revision.4% -0. or even if personal consumption doesn’t pick up soon.8% 3.S.7% 3.4%. except that the BEA also revised GDP estimates for earlier periods. GDP grew at an anemic 1. as well as improved estimating methodologies.0% 3.    Rail Time Indicators – August 5.9% 0.7% 2.GROSS DOMESTIC PRODUCT (GDP) Who releases it and when?  U.9% -0. Assuming it’s measured accurately.3% -3.7% 1.0% The table at right summarizes the BEA’s July 29 GDP revisions.S.6% 3.9% 3. Quarterly Real U. 2011 Revisions Original Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2008 2009 2010 0. it’s probably the single most conclusive piece of information on the health of an economy. The revisions also show that the recovery since the recession ended has been even more feeble than first thought.7% -8.3% 0. measured quarterly and revised several times as better data become available.5% 2. Real GDP Growth: July 29.S.9% -6.2% 2. Everyone already knew that the recovery has been extremely weak.7% 1. In the United States.3% -3. the latest BEA data show that there is much less “margin for error” in the economy than most people thought.3% growth would have easily been the lowest of any quarter since the recession officially ended in mid-2009. usually made each July.3% annualized rate in the second quarter of 2011. What is it and why is it important?  GDP (the output of goods and services produced by labor and property in a country) measures the size of an economy and how fast it’s growing. according to the BEA’s first preliminary estimate released on July 29. Source: Bureau of Economic Analysis  What are the latest numbers?  U.3% 2.6% 3.8% and -4. according to the BEA. not the 2.7% -1.0% -2. Bureau of Economic Analysis (BEA).6% -4. there is an unexpected economic shock. that incorporates newly available and more comprehensive source data.6% originally estimated by BEA.9% in Q4 2008 and 6. with GDP contracting an annualized 8. The second quarter’s 1.5% 3.8% 1.

I = investments by business or households in capital (e. G = government spending. Because consumer spending is such a big part of GDP. medical expenses.3 trillion.5% 0. rent. (This recent recession marks the first time in the post-World War II era in which GDP for a given quarter was less than it was 3 ½ years earlier. etc. and in any case further supports the idea that consumers are sitting on their wallets instead of opening them. Two years later. C = approximately 70% of GDP.S.5 $12. In percentage terms. and G = approximately 20% of GDP.5 $11. As the chart below right shows.2% decline in June 2011 noted above is in non-inflation adjusted Data are based on figures that are seasonally adjusted but are not adjusted for inflation.2% decline in June 2011. there have been seven “official” recessions.5% 1.).6 trillion (see the chart below left).. Note the big difference between the months in the second half of 2010 and first quarter of 2011. housing.0% 0. or 5% higher. including most personal expenditures of households (e.0 $10. but not by much. on the one hand. The latest data suggest that isn’t happening yet. Source: Bureau of Economic Analysis terms. The chart below left shows that GDP as of the second quarter of 2011 ($13. strong GDP growth won’t happen until people decide they want to spend money again. In inflation-adjusted terms.5% -1.5 $13.5% -2.     Since 1970. and (X-M) = exports minus imports.0 $12.g. which ended in June 2009. was $12. That’s better than the corresponding non-adjusted figure. In 2005 dollars.33 billion) when the recession began 3 ½ years earlier. Gross Domestic Product % Change in Real GDP Two Years Following the End of Recent Recessions 16% 14% 12% (trillions of seasonally adjusted 2005 $ at annual rates) $14. GDP = C + I + G + (X-M) where C = private consumption. the first substantial decrease in almost two years (see chart at right). that 5% increase is much lower than the typical increase two years after the end of a recession.0% 2010 2011 2006 2007 2008 2009 The 0. food.g. I = approximately 14% of GDP.. locomotives).0 $11.27 billion) is still less than it was at its peak in the fourth quarter of 2007 ($13. the most recent being the one ending in June 2009.0 $13.0% -0. % Change in Personal Consumption Expenditures: January 2006 . The most recent figures on personal consumption expenditures (PCE — the “C” in the GDP equation above) show a 0. PCE in June fell less than 0. washing machines. GDP in Q2 2009.0% -1. As we occasionally point out in Rail Time Indicators.June 2011 1. and the months in the second quarter of 2011 on the other. GDP (still in 2005 dollars) was $13. Source: BEA Rail Time Indicators – August 5. as of Q2 2011. 2011 Page 18 of 37 .) U.1%.5 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bureau of Economic Analysis 10% 8% 6% 4% 2% 0% Nov 1970 March 1975 July 1980 Nov 1982 March 1991 Nov 2001 June 2009 Month Recession Ended % change is based on the difference in real GDP in the quarter closest to the end of the recession and GDP in the quarter two years later. machine tools.

on the first business day of each month. Much of what railroads haul. According to the ISM.to medium-term sentiment.July 2011 70 65 60 55 50 45 40 35 30 25 20 2006 2005 2007 2006 2008 2007 2009 2008 2010 2009 2011 2010 Data are seasonally adjusted. a PMI greater than 41. production. a PMI > 50 indicates that overall manufacturing is expanding. is here. supplier deliveries. generally indicates an expansion of the overall economy. It is based on a survey of several hundred supply managers at manufacturers throughout the country. BEA will release its second estimate of Q2 2011 GDP on August 26. inventory control and management.2. when year-over-year real GDP growth falls below 2 percent. 2011 Page 19 of 37 . This doesn’t mean that a double-dip recession is imminent. Reuters columnist James Pethokoukis recently pointed out that research from the Federal Reserve finds that that since 1947.6% above Q2 2010 levels (see the chart on page 2). but the decline over the past few months is unmistakable — it’s fallen in four of the past five months. Also according to the ISM. Manufacturing accounts for around 12% of U. recession follows within a year 70% of the time.S. The PMI is considered an indicator both of actual “on-the-ground” conditions as well as near. over time. which was conducted from July 8 through July 13 and released on July 18 — before the most recent revised-downward GDP numbers discussed above came out — the consensus view was that GDP would grow nearly 3% in the second half of 2011 and in 2012. inventory. Source: Institute for Supply Management recession   What are the latest numbers?  The PMI fell from 55. including links to detailed data tables. Purchasing Managers Index: January 2006 . consists of raw materials for manufacturing or finished manufactured goods. In the most recent survey.S. Economists in the poll expected Q2 GDP growth to be 1.9 in July 2011 (see the bars in the chart at right). Supply managers typically handle purchasing/procurement. is expanding) (< 50 = manuf. PURCHASING MANAGERS INDEX (PMI) Who releases it and when?  Institute for Supply Management (ISM – formerly the National Association of Purchasing Managers). and physical distribution and warehousing. What is it and why is it important?  The PMI combines data on new orders. of course. is still by far the world’s top manufacturer. New orders Overall PMI (> 50 = manuf. its lowest level since July 2009 and barely above the “50” level that is thought to signify expansion of the manufacturing sector.  Where to go for more information:  The most recent BEA news release on GDP. For what it’s worth.3%. a PMI < 50 indicates that manufacturing is contracting. July 2011 marks the 24th straight month that the PMI has been above 50.3 in June 2011 to 50. preliminary Q2 2011 GDP was 1. but as noted above the preliminary BEA figure was 1. but most economists would probably say the chances are better than they would have said they were a couple of weeks ago. It would be surprising if next month’s survey didn’t see lowered expectations for the economy from the panel. but the U. GDP — not as much as it used to. The sharp decline in the PMI in July was a surprise to most economists.9%. and employment. is contracting) Rail Time Indicators – August 5. Each month we mention the latest Wall Street Journal survey of leading economists.

7 from 53. The ISM’s press release on the July NMI is here. GDP and around 80% of Non-Manufacturing Index (NMI): private-sector employment. bringing it to a level not seen since June 2009. it paints a worrying picture. The chart at right compares rail traffic with the PMI.S.6 in June to 49. 40 Note the decline in the NMI since early 2011. but we’re making an 60 exception this month. 10 reported growth in July 2011. the service sector is expanding at its slowest pace in 18 months. The chart above left shows the “production” component of the purchasing managers index.S.6 in June 2011 to 51.Purchasing Managers Index: Production January 2006 . The weakness in manufacturing is clearly bad news. 1. It too has fallen in four of the past five months. The last time it was as low as July 2011 was February 2010. The August NMI will be released on Sept. however.July 2011 (Index January 2006 = 100) 120 110 100 90 80 70 60 50 40 30 20 10 0 2006 2005 2007 2006 2008 2007 2009 2008 2010 2009 2011 2010 Source: Institute for Supply Management PMI vs. Taken together with recent weak industrial production numbers (see page 23).7 in July. the NMI fell in July to 55 52.3 in June. 13 [of 18] non-manufacturing industries reported growth in July. The August PMI will be released on Sept.July 2011 70 usually don’t talk about the NMI two 65 months in a row. (You’ll recall that the NMI is like the PMI except that it focuses on service industries." Not a good sign. *Carloads + intermodal units.) We January 2008 . 6. The “new 50 orders” component of the NMI fell 45 from 53. As the chart at New orders component right shows. How bad will depend on how long it lasts and if it gets worse. AAR  The new orders component of PMI fell from 51. Of the 18 manufacturing industries tracked by the ISM. 35 30 25 20 2008 2009 2010 2011 Data are seasonally adjusted. rather than on manufacturing. “According to the NMI.2 in July (see the line in the chart on the previous page). Rail Traffic: Jan. 2006 . Services account for around two-thirds of U. for the most part they indicate that business conditions are flattening out. the lowest number since November 2010. Respondents' comments remain mixed. meaning that. 2011 Page 20 of 37 . U. Rail Time Indicators – August 5. Last month we talked about the ISM’s non-manufacturing index (NMI). the ISM noted. Source: Institute for Supply Management     Overall NMI (> 50 = non-manufacturing is expanding) (< 50 = non-manufacturing is contracting)  Regarding the July NMI. Sources: ISM. 2006 = 100) 120 110 Rail traffic* 100 90 80 70 60 50 2006 2007 2008 2009 2010 2011 PMI Data are seasonally adjusted. based on the NMI.July 2011* (Jan. Where to go for more information:  The ISM’s press release on the July PMI is here. Note its sharp decline since it peaked in March 2011.

consistent with the plateauing evident with industrial production (see page 23) and capacity utilization (see page 25). Meanwhile. inventories must rise if production is kept at the same pace. 2006 . This leads to job losses.4 billion.34 (see chart below right). inventory earns no return on investment. The ratio for wholesalers is close to its pre-recession level. Source: Census Bureau Data are seasonally-adjusted. For manufacturers. Rail Time Indicators – August 5.4 1. When sales rise. Figures are seasonally adjusted. 2011 Page 21 of 37 .2% from May 2011 to $444. either inventories must fall. We last showed this chart a few months ago. manufacturing inventories rose 0. But manufacturers don’t want too little inventory either. They’ve been basically flat for four months (see the bars in the chart below left and the chart on the top left of the next page). What is it and why is it important? The report is based on data reported from manufacturing establishments with $500 million or more in annual shipments covering 89 industry categories.June 2011 ($ Billions) $625 $600 $575 $550 $525 $500 $475 $450 $425 $400 $375 $350 $325 2006 recession 1. at the very end or very beginning of each month. A lot of retailers got stuck with inventory they couldn’t sell when the recession hit. “destocking” occurs via production cuts. they want to be sure that doesn’t happen again. fewer raw material purchases.2 1. This means more employment. as we noted in April. Sales & Inventories: Jan. For retailers. it’s still a bit higher.1 1. Inventory-Sales Ratio for Manufacturing: January 2006 .5 1. it’s quite a bit lower. Eventually. Source: Census Bureau  The chart in the middle left of the next page shows the most recent available data (through May) on inventory-sales ratios for wholesalers and retailers in addition to manufacturers.MANUFACTURING INVENTORIES AND SALES Who releases it and when?    The U. The corresponding inventory-sales ratio for manufacturing was flat in June 2011 at 1. they want an inventory level that’s “just right.0 2007 2008 2009 2010 2011 Manufacturing sales 2006 2007 2008 2009 2010 2011 Data are seasonally-adjusted but not adjusted for inflation.” When sales fall. or both. Manufacturers don’t want to hold too much inventory because it costs money to store it and it can become obsolete or spoil. Eventually.3 Manufacturing inventories recession   Manufact. Moreover.2% in June to $594.June 2011 1. and other positive economy-wide effects. Like Goldilocks. inventories become too low and “restocking” occurs via production increases.S. more raw material purchases. or they could lose sales.3 billion. and other negative economy-wide effects. when inventories are too high.  What are the latest numbers?  Manufacturing sales in June 2011 rose just 0. their slowest rate of increase in more than a year (see the line in the chart below left and the chart on the top right of the next page). Census Bureau. production must increase.

and so on. inventory-sales ratio 1. Sources: Census Bureau.5 Manufacturing Retail Manufact. 2006 = 100) 140 130 120 110 100 90 80 Mfr. Source: Census Bureau Inventory-Sales Ratio: Manufacturing vs. Sources: Census Bureau. 2006 = 100) 180 160 140 120 100 80 Inventory-sales ratio for primary metal products Inventory-sales ratio for chemicals Rail carloads of chemicals 1 month later correlation = -85% 60 40 20 2006 correlation = -79% Rail carloads of primary metal products 1 month later 2007 2008 2009 2010 2011 Data are seasonally adjusted. 2006 = 100) 130 120 110 100 90 80 70 60 50 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted. 2006 . Sources: Census Bureau. Carloads exclude U.6% 4% 2% 0% -2% -4% -6% -8% % Change in Manufacturing Sales From Previous Month: Jan.May 2011 1. Source: Census Bureau Data are seasonally-adjusted but not adjusted for inflation. Data are seasonally adjusted. Where to go for more information:  The Census Bureau’s full report on manufacturing sales and inventories in June is here. Carloads exclude U. Rail Time Indicators – August 5. **January inventory-sales ratio vs. AAR  The middle right chart and the two bottom charts on this page compare the manufacturing inventory-sales ratio to rail traffic one month later. Rail Carloads of Primary Metal Prod. Rail Traffic* One Month Later: Jan. operations of CN and CP.4 1.7 1.S. operations of CN and CP. Wholesalers January 2006 .June 2011 recession 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Data are seasonally-adjusted but not adjusted for inflation. 2006 . Source: Census Bureau 70 60 correlation = -94% Rail traffic* 2006 2007 2008 2009 2010 2011 *Carloads + intermodal units. 2006 .3 1.2 Wholesalers Total 1. U. Inventory-Sales Ratio vs. February rail traffic. AAR Inventory-Sales Ratio for Chemicals vs.S.6 1. Rail Carloads of Chemicals 1 Month Later* (Index Jan. They are fairly strongly negatively correlated.June 2011 recession 3% 2% 1% 0% -1% -2% -3% -4% % Change in Manufacturing Inventories From Previous Month: Jan. AAR Inventory-Sales Ratio for Primary Metal Products vs.June 2011** (Index Jan.0 2006 2007 2008 2009 2010 2011 Data are seasonally-adjusted.S. 2011 Page 22 of 37 . Figures for July 2011 will be released on August 31. Retail vs.1 1. 1 Month Later* (Index Jan.

by far the smallest quarter-to-quarter increases since the recession officially ended in mid-2009. and utilities) rose 0. 95 Overall 90 85 80 75 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted. In the second quarter of 2011.S. mining.1% higher in June 2011 than in June 2010 (see the line in the chart below left).S. both total industrial production and the manufacturing component were up just 0. around the middle of each month.S. Overall U. industrial firms such as factories. Source: Federal Reserve -3% hurricanes -4% -5% 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted. Data are obtained from a variety of government and industry sources.2% in June 2011 over May 2011 and was 3.2% over the first quarter of 2011. Source: Federal Reserve Rail Time Indicators – August 5. 2011 Page 23 of 37 . Manufacturing accounts for about 75% of industrial production. Source: Federal Reserve Motor vehicles & parts Cement & concrete prod. The industrial sector typically exhibits the most volatility in output during a business cycle.  What are the latest numbers?  Total U. manufacturing output was flat. Large changes in industrial output can mean that a business cycle has reached an inflection point. mines.S.S.June 2011 (January 2006 = 100) 175 150 125 Durable consumer goods RR rolling stock U.2% in June 2011 over May 2011. Data from the previous few months are subject to revision. industrial production (including manufacturing. but utility and mine output are key components as well.INDUSTRIAL PRODUCTION Who releases it and when?  The Federal Reserve. 60 50 40 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted. Industrial Production: Jan.June 2011 (January 2006 = 100) 130 120 110 100 90 80 70 Wood Paper Chemicals Iron & steel 100 75 50 25 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted.S. and electric utilities. Source: Federal Reserve U. Industrial Production: Select Sectors January 2006 . Once a year. What is it and why is it important?  Industrial production figures are based on the monthly raw volume of goods produced by U.4% higher in June 2011 than in June 2010.June 2011 (Index January 2006 = 100) 110 recession 105 100 Manufacturing 1% 0% -1% -2% Total industrial production was up 0. Industrial Production: % Change From Previous Month January 2006 .June 2011 2% recession  U. 2006 . Industrial Production: Select Sectors January 2006 . data for many previous years are updated. Manufacturing output was flat in June 2011 compared with May 2011 and was 4.

 The chart below shows industrial production for several major industrial sectors in the first six months of 2011.S. home appliances. Note that both overall industrial production and its manufacturing component have basically been flat so far in 2011. July 2011 data will be released on August 16. AAR correlation = 93% 105 100 95 Blue bars = industrial production Red line = rail traffic* 90 85 80 75 70 Blue bars = industrial production Red line = rail traffic* correlation = 87% 2006 2007 2008 2009 2010 2011 *Carloads + intermodal units Data are seasonally adjusted. Source: Federal Reserve. 2011 Page 24 of 37 . but it’s a bit stronger for carloads than for intermodal. Output has been trending down for iron and steel.S. Rail Time Indicators – August 5. Iron & steel Wood products Motor vehicles Paper Chemicals Consumer RR rolling durables stock Data are seasonally adjusted. motor vehicles. It’s been basically flat for chemicals and consumer durables (which includes things like cars.June 2011 (January 2006 = 100) 105 100 95 90 85 80 75 70 65 60 55 50 Total Manufact. AAR Where to go for more information:  The Federal Reserve release on industrial production in June 2011 is here. In both cases the correlation is strong and positive. Overall U. below right is a chart showing the correlation between industrial production and rail intermodal traffic. and paper. and furniture). Industrial Production: January 2011 . Source: Federal Reserve  Below left is a chart showing the correlation between industrial production and rail carload traffic. Industrial Production vs. Industrial Production vs. Output of railroad rolling stock is noticeably up so far in 2011 and is the only sector among those shown whose output is now higher than it was in January 2006. Rail Intermodal Traffic* (January 2006 = 100) 110 recession 110 recession 105 100 95 90 85 80 75 70 2006 2007 2008 2009 2010 2011 *Carloads + intermodal units Data are seasonally adjusted. Source: Federal Reserve. Total U. Total U.S.S. Rail Carload Traffic* (January 2006 = 100) Overall U.

For example. What is it and why is it important? Capacity utilization attempts to capture the concept of sustainable maximum output — i. and electric and gas utilities.0% Overall capacity utilization was up an underwhelming 0. up a rounded 0.5% -2. 2006 . Firms in every industry walk a tightrope when it comes to capacity. higher overtime costs). Utilization levels above 82%85% are generally considered "tight" and portend price increases or supply shortages in the near future.S. If they take too long to bring back idled capacity or build new capacity.5% 1. The chart confirms that there’s been very little change in overall capacity utilization recently.g. iron and steel.S. normal downtime. the more slack there is in the economy or particular sector.71% in June 2011.5% 0. capacity utilization rates (at least on an economy-wide basis) never come close to 100%. The data cover manufacturing.0% -3.1% from 76. the highest output a plant can maintain assuming a realistic work schedule. say.0% 75% Overall recession  U. That’s not been the case for some individual industries.0% 0. Capacity utilization for manufacturing was 74. Capacity utilization for chemicals has been trending up over the past six months. around the middle of each month. In theory.1% in June 2011.0% -1. The farther below this level.June 2011 85% Manufacturing recession 80% -0.. capacity utilization was 76. 70% means there is room to increase production up to 100% without having to build new plants or add equipment.June 2011 1.e. 2006 . mining.5% hurricanes -3. There’s been no significant change in the level of overall capacity utilization since December 2010. Rail Time Indicators – August 5.S. 70% 65% -2. note the decline in capacity utilization over the past few months for the auto sector — no doubt at least in part caused by the supply disruptions caused by the earthquake and tsunami in Japan in March. Capacity Utilization: Jan. they risk shortages and lost sales.9% in June 2011.CAPACITY UTILIZATION Who releases it and when?   The Federal Reserve. It’s no surprise that different industries have different levels of capacity utilization. In practice. 2011 Page 25 of 37 .5% 2009 2010 2011 2006 2007 2008 2009 2010 2011 60% 2006 2007 2008 Data are seasonally adjusted. On the other hand. Percentage Point Change in U.65% in May 2011 (see chart below left). and sufficient availability of inputs to operate the capital in place. and plastic materials and resins..   What are the latest numbers?  Overall U. while it’s been trending down for paper. Or. a capacity utilization rate of. they could face higher costs in other areas (e. or in capacity utilization for total manufacturing. its third straight month at that level. Capacity Utilization From Previous Month: Jan. adding capacity that ends up not being used adds costs with no offsetting returns. Source: Federal Reserve  The chart on the top of the next page shows capacity utilization for several key industrial sectors each month for the first six months of 2011. Source: Federal Reserve Data are seasonally adjusted.5% -1.

(It appears to be continuing for wood products. most sectors had materially lower total capacity than they did in 2006 and 2007.000 2008 2009 2010 2011 60% 2006 2007 *Carloads + intermodal units.S.S.000 475.000 525. AAR Where to go for more information:  The Federal Reserve release on capacity utilization in June 2011 is here. U. but for most sectors the decline in capacity has halted. An industry’s productive capacity changes over time as new capacity is added (usually when times are good) or is removed (usually when times are bad). the most expensive to operate.90% 85% 80% 75% 70% 65% 60% 55% Total Capacity Utilization: January 2011 . The chart shows that. Data are for U. — is usually removed first.July 2011 85% 80% 75% recession 600. shows U.000 450. July 2011 data will be released on August 16.000 Motor vehicles 70% 65% Capacity utilization (left scale) 500.) July capacity utilization figures will be released on August 16. as of June 2011. etc. Chemicals Motor vehicles Iron & steel Paper Wood products Utilities Plastic materials Data are seasonally adjusted. Rail Time Indicators – August 5.000 575.S. Source: Federal Reserve  The chart below left.000 Rail traffic* (right scale) 550.June 2011 Manufact. it appears likely that capacity utilization could be lower (see chart below right). which we last showed in March 2011. Source: Federal Reserve. don’t look for a big improvement — if anything. Rail Traffic January 2006 . Marginal capacity — the least productive.000 85 Plastic materials & resins 80 75 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted. weekly average per month. Source: Federal Reserve correlation = 97% 425. 2011 Page 26 of 37 . and are seasonally adjusted.000 400.S. Industrial Capacity by Sector (Index January 2006 = 100)  120 115 110 105 100 95 90 Wood products Paper Iron & steel Chemicals Overall Capacity Utilization vs. Total U. industrial capacity for several key industrial sectors. Based on rail traffic in July.

  What are the latest numbers?  The July 2011 employment numbers could have been a lot worse. In the May 2011 Rail Time Indicators – August 5. 000s July 2011: +117. therefore.000-125. In the United States.000 jobs. The unemployment rate. making June a bit less dismal than originally thought.S. come from the household survey.6 million jobs 2009: -5.000 or more jobs from one month to the next is generally considered solid job growth.000 government jobs.000 net new jobs were added. (Average monthly U. in the same month there can be a sharp drop in the unemployment rate (household survey) without many new jobs created (establishment survey).2% in June 2011. unemployment rate fell to 9. and. total net new jobs in June 2011 were revised up from 18.000 private sector jobs and a net loss of 37.1 million jobs 2007: +1. Source: Bureau of Labor Statistics  The chart above right shows that there is a significant difference in the unemployment rate for men and women. (The government net job losses were all state and local government jobs. 2006 . and the labor force participation rate. The two different surveys sometimes produce puzzling results. Employment is often considered a lagging indicator because employers often decide to wait until they’re sure an economic recovery is here to stay before making new permanent hires.1% in July 2011 from 9. which is what we had the past three months. 117. Weak job numbers cause even the still-employed to become less confident of the future. Among other things.S. the net number of jobs gained or lost in a given month and the employment by industry figures come from the survey of businesses. In the meantime. seasonally adjusted. The official unemployment rate fell to 9. though the gap has narrowed over the past 18 months or so.000 businesses. job growth from September 2003 through December 2007 was 157. they might rely on more hours for existing workers or on temporary workers. labor market.000 to 46. Figures are seasonally adjusted.S.S. a gain of 150. among other data.000.) Job growth of at least 100.) In addition. the size of the labor force. Non-Farm Employment: January 2006 . 2011 Page 27 of 37 . Change in U.1 million jobs 2008: -3. For example. less prone to spend money (see “Consumer Confidence” and “Retail Sales” below).1 million jobs 2010: +0.July 2011* 12% 11% 10% 9% 8% Men The official U.000 in July.000 7% 6% 5% 4% 3% W omen 2006: +2. including a net gain of 154. Unemployment Rate: Jan.1% in July 2011 from 9.July 2011* 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700 -800 -900 Red line is roughly what bars would look like if census-related employment were excluded. What is it and why is it important? The figures provide a snapshot of the strength of the U.2% in June 2011.000 households.S. but it beats an increase. federal employment rose by 2.9 million jobs 2006 2007 2008 2009 2010 2011 Overall 2006 2007 2008 2009 2010 2011 *Change from previous month. except that it includes only private sector jobs. They are based on two separate surveys: 1) an “establishment survey” of more than 400. Source: BLS *Civilian labor force. The chart on the top left of the next page is like the chart below left.S. That’s certainly not a big enough decrease to break out the champagne.NUMBER OF EMPLOYED PERSONS AND UNEMPLOYMENT RATE Who releases it and when?   U. and 2) a “household survey” of 60.000 is needed just to keep up with the typical growth in the labor force from one month to the next. Bureau of Labor Statistics (BLS) near the beginning of each month.  U.

Data for August 2011 will be released on September 2. Bureau of Labor Statistics *Change from previous month.July 2011* 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 -700 -800 -900 2006 2007 2008 2009 2010 18% 16% 14% 12% July 2011: +154.5 3.0 2.000).9% in July 2011. U.000 — in the size of the labor force. 2006 . Bureau of Labor Statistics Where to go for more information:  The BLS press release on the July employment situation is here.5 4. The decline in the unemployment rate in July 2011 was aided by another decline — this time. The chart below right shows that average overtime hours for manufacturing employees was 4.0 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted.000). 193.S. Labor Force Participation Rate: Jamnuary 2006 .0 3. The labor force participation rate — people with a job or looking for a job divided by the working age population — fell to 63. Since 1990. manufacturing (+24. we showed that there is a wide gap in the unemployment rates for Blacks/African Americans and Hispanics/Latinos compared with the overall rate. Firms can rely on overtime and temporary employees up to a point to avoid hiring new permanent workers. health care (+31.July 2011* 20-24 35-44 25-34 000s 10% 8% 6% 45-54 55 & over 4% 2% 2011 2006 2007 2008 2009 2010 2011 *Civilian labor force. seasonally adjusted. among others. and construction (+8. Source: U. Source: U. Source: U. 2011. Source: BLS  Private sector industries showing job gains in July included.5 5.S.Rail Time Indictors report. Figures are seasonally adjusted. the only month that saw a month-to-month decline in health care jobs was July 2003.0   67% 66% 65% 64% 63% 62% 2006 2007 2008 2009 2010 2011 4. the same as in May and June but down slightly from earlier months.S.000 U.1 in July 2011. The number of temporary workers has been flat or falling the past five months.S. All else equal. Weekly Overtime Hours for Manuf. Bureau of Labor Statistics *The number of people considered part of the labor force divided by the working age civilian non-institutional population. a smaller labor force means a lower unemployment rate.000). The chart below right shows that there is also a big gap in the unemployment rate by age. Rail Time Indicators – August 5. Those under 24 are far more likely to be unemployed than older cohorts.0 1.July 2011* Avg. retail sales (+26.000).5 1.5 2. Change in Private Sector Employment: January 2006 .S. Unemployment Rate by Age Group: Jan.July 2011 5. Employees: January 2006 . 2011 Page 28 of 37 . continuing its steady decline since the recent recession began in December 2007 (see the chart below left).

600 -2.CLASS I FREIGHT RAILROAD EMPLOYMENT Who releases it and when?   The Surface Transportation Board (STB). the bars in this chart are around 1. Source: STB recession  Class I Railroad Employment: Jan. which we last showed three months ago. What is it and why is it important? The data show the average number of Class I employees at mid-month. how much freight is being hauled.000 800 400 0 -400 -800 -1. RR Train & Engine Employees* vs. Data are non-seasonally adjusted 3-month moving averages. Change in Class I Train and Engine Employment: January 2006 . Rail Time Indicators – August 5..2%) higher in June 2011 than in June 2010.000 155.818 in June 2011 over May 2011. AAR (for traffic) Where to go for more information:  The STB web site for railroad employment data is here.000 140. Source: STB  “Train and engine” employees — mainly the conductors and engineers who run trains — constitute the single largest category of rail employees.000 160. Train and engine employment in June 2011 was up 4.000 145. As in other industries.e. What are the latest numbers?  Class I freight railroad employment rose by 1. but there is still a ways to go before railroads return to pre-recession employment levels. The chart at right.June 2011 170. The chart above right shows the month-to-month change in train and engine employment in recent years. Total employment was 7.000 135. employment in the rail industry is largely a function of the level of business — i. shows the strong positive correlation between rail traffic and train and engine employment.470 (7. the biggest month-to-month increase since April 2010. Rail Traffic** (Index January 2006 = 100) 110 recession 100 90 80 70 correlation = 92% Rail traffic** Train & engine employees*  60 2006 2007 2008 2009 2010 2011 *Mainly engineers and conductors.200 -1.5%) over June 2010. **Seasonally adjusted carloads + trailers + containers Source: STB (for employment). Data are based on non-seasonally adjusted 3-month moving averages. The industry’s employment growth since bottoming out is far greater than for most industries.000 150. 2004 .000 2004 2005 2006 2007 2008 2009 2010 2011 Beginning in January 2010.000 2006 2007 2008 2009 2010 2011 Beginning in January 2010.813 (5. around the middle of the month.000 employees higher than in previous months due to the inclusion of employees from two large railroads acquired by a Class I railroad.200 165. 2011 Page 29 of 37 .June 2011 1. The chart below left shows the 3-month moving average total Class I employment in recent years. the bars in this chart are up to several hundred employees higher than in previous months due to the inclusion of employees from two large railroads acquired by a Class I carrier.

Despite the increase the trend e e. S. in  20 008 2009 2010 2011 Source: Co onference Board  Where to go for more information o e n:  The Conferenc Board’s pre release on July’s cons ce ess o sumer confide ence index is here. s wer.. non-economic c fa actors — such as terrorist attacks.S. income. esp pecially big-tic cket items. hou eys useholds. e oing to be som me “n noise” and mo onth-to-month volatility in consumer sen h c ntiment. ard rt Frankly. It is designed to o ga auge the financial health. o even a goo performance at an h a or od in nternational sp porting event — can come into play too Thus. n d. so ome of the co oncern expres ssed last month has aba m ated. spending pow and confiidence of the average U. recent m f do ownward revi isions in GDP (see page P 17 stock market turmoil. t What is it and why is it important? The index is ba ased on surve received from about 3 .5. x sed st Rail Time Indicators – Au I ugust 5. right now it’s hard to think of n t a good reason why consum mer co onfidence sho ould increase ap ppreciably an nytime soon. Augus st’s co onsumer conf fidence index will be releas on Augus 30. on the theory that the more conf e fident co onsumers are about their job prospects. consumers remain ap pprehensive about the futu but a ure.5. le ess-than-chee economic news. such as gasoline pric Consumers’ ps C syches are most heavily in nfluenced by e economic fact ces. 2011 Page 30 of 37 0 . th unemploym he ment rate. e c ho owever.6 i June 2011. t vement in co onsumers’ sh hort-term outlo ook. ov the past six months ha been ver s as cl learly downwa (see char at right). Over rall. Respondents are asked abo current co R a out onditions and their expecta ations for the next six mont ths.July 20 011 120 110 100 90 80 70 60 50 40 30 20 10 0 2006 2007   umbers? What are the latest nu  Consumer confidence in July 2011 C J ro to 59. p Index of Consumer Confid dence: January 2 2006 . making trends mo important than ore a single data point.” tors. The index is de esigned to pre edict future co onsumer spe nding. was less favorable as e co oncerns abou the labor market ut co ontinue to we eigh on consumers’ at ttitudes. etc the more lik e c. ery What the Conf W ference Board said d ab bout the July index: “Consumer co onfidence pos sted a modes gain in st Ju the result of an improv uly.CONSUMER CONFIDENCE Who releases it and when? w   The Conferenc Board on the last Tuesd of the mo ce day onth.000 U. As David Wys (the chief e A ss economist at S Standard & Poor’s) ha said.” (Index 1985 = 100) x July 2011 was 59. there is always go e o. up from 57. Consumers’ ap C ppraisal of current bu usiness and employment conditions. and how much money they h d m have to spend However. still-f age falling home prices in p many areas of the country. given the g st till-lousy employment situa ation (see pa 27). A c cautious consumer repairs the old one. “A co as onfident consu umer buys a new car. kely they are to make pu urchases. a military victory.S consumer. up from 57.6 in June ose u 20 011. and other 7).

0% 3.June 2011 4.1% decline in May and a 0. it will be virtually impossible to have solid GDP growth. (Retail sales figures are not adjusted for inflation.0% -1.5% 13. around the ninth business day of each month. the health of the economy depends largely on how much “stuff” people buy.5% 2005 2006 2007 2008 2009 2010 2011 Source: Federal Reserve *Core retail sales are total sales excluding autos and gasoline.) Personal consumption accounts for approximately 70% of U.0% 0.0% 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted but are not adjusted for inflation.000 retailers of all types to track the dollar value of physical merchandise sold. as long as consumer spending is stagnant like it’s been recently.0% 10. Source: Census Bureau % Change in "Core" Retail Sales from Previous Month: January 2006 .5% 1.0% 2006 2007 2008 2009 2010 2011 Mortgage and Consumer Debt as a Percentage of Disposable Income: Q1 2005 .S. though. It’s circular.5% -1. Figures are based on data that are seasonally adjusted but are not adjusted for inflation. Source: Census Bureau Total Retail Sales: January 2006 .0% 0.0% -0. Retail sales in July 2011 were 8.5% 14. (The “personal consumption expenditures” component of GDP is adjusted for inflation.5% 11.0% 11.0% 13. Census Bureau.) ($ billions) $400 $390 $380 $370 $360 $350 $340 $330 $320 $310 $300 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted but are not adjusted for inflation.1% ($534 million) in June 2011 over May 2011 as consumers continued to keep a tight hold on their wallets.5% 0.1% increase in June (which is subject to revision) follows a -0.0% 12.5% -2. GDP.5% 12. but is less timely than retail sales.2% increase in April (see the chart below right).June 2011 % Change in Total Retail Sales from Previous Month: January 2006 .0% 2. The data are adjusted for holiday differences and seasonal variations but are not adjusted for inflation. Source: Census Bureau Rail Time Indicators – August 5.June 2011* 2.0% 1.0% -4.Q1 2011* 14.0% 1.  What are the latest numbers?  Total retail sales rose just 0.1% higher than they were in July 2010.S. Thus. 2011 Page 31 of 37 .0% -2. As we noted in our discussion of “personal consumption expenditures” on page 18. The 0.0% -3. What is it and why is it important? The Census Bureau surveys 5.RETAIL SALES Who releases it and when?   The U. because the health of the economy determines how much “stuff” people can buy.0% -1.

ICSC data for July 2011 showed a 4. or other consumer items. movie tickets.5% — its lowest level since the second quarter of 1995. The chart on the bottom right of the previous page is an update of a chart we last showed in May.9%. the second-busiest shopping period of the year.00 $3.00 $1. thanks largely to a decline in average gasoline prices during the month.June 2011 $55 $50 correlation = 94% $4. each month the International Council of Shopping Centers (ICSC) releases sales data for major retailers. Rail Time Indicators – August 5.50 $3.June 2011 13% 12% 11% 10%   Retail Sales at Gasoline Stations vs. the month-over-month rate of increase in core retail sales has fallen for four straight months. Where to go for more information:  The Census Bureau’s press release covering June 2011 retail sales is here. The gain in June 2011 had been 6. Price of Gasoline: January 2006 .1% in June 2011. July 2011 retail sales will be released on August 12. Retail sales at gasoline stations fell 1.50 $4. The retail sales figures for the past few months indicate this isn’t happening yet. So-called “core” retail sales — total retail sales excluding gasoline and autos (which are more volatile than other retail sales categories) — also rose just 0. such as student loans.6% increase in sales revenue over July 2010 for stores open at least a year. It shows estimated mortgage and consumer debt as a p ercentage of disposable personal income. Money spent on gasoline is money not available to spend on electronics.50  On a separate but related note. there is a very close correlation between the average price of gasoline and retail sales of gasoline (see chart below left). Retail Sales at Gasoline Stations as a % of Total Retail Sales: January 2006 . we noted that to the extent consumers think they have their finances in order. As the chart on the bottom left of the previous page shows.00 $0. The chart below right shows that retail sales at gasoline stations as a percentage of total retail sales has fluctuated quite a bit over the past few years. credit card debt. July marks the start of the “back to school” season. per gallon price of gasoline (right scale) $45 $40 $35 $30 $25 $20 $15 2006 2007 2008 2009 2010 2011 Source: Census Bureau. and other personal debt. tighter lending standards by banks. and loans being written off because repayment is unlikely. In May. they might be more likely to go out and spend again.00 $2. Energy Information Administration 9% 8% 7% 6% 2006 2007 2008 2009 2010 2011 Source: Census Bureau $1.50 Bars = retail sales at gasoline stations (left scale. chicken wings.3% ($579 million) in June. Debt has fallen for a number of reasons. As you’d expect.50 $2. including credit card repayment.1 This percentage has been falling steadily for several years and by Q1 2011 was down to 11. 1 For this purpose. 2011 Page 32 of 37 . debt includes required payments on outstanding mortgage and consumer debt. thereby boosting retail sales and the economy. $ billions) Line = avg.

7% over May 2011’s 11.000 in July 2011.S. up 6. "Cash For Clunkers" What are the latest numbers?  New light vehicle sales rose in July 2011 to an annualized and seasonally-adjusted 12. Rail carloads are seasonally adjusted weekly averages per month. 6% of U. light vehicle sales were 12.2 million in July 2011. The chart above right shows the very close correlation between U. and pickups. on average.S. minivans.S. for about 3.000 in July. Source: AAR. 2011 Page 33 of 37 .7% of U.000 0 2010 2011 *Passenger cars. despite the high price of gasoline. Source: BEA minivans.000 24. minivans. Conference Board *Passenger cars. Rail Time Indicators – August 5. sales of cars and light trucks. In 2010. and Canadian rail carloads of motor vehicles and light vehicle sales.7 million.S.8% over July 2010. Sources: BEA. spending on motor vehicles has accounted. + Canadian Rail Carloads of Motor Vehicles & Equipment 18 16 105 90 75 60 Light vehicle sales* (left scale) correlation = 93% "Cash For Clunkers" U.000 in June to 552. sales of presumably less fuel efficient cars fell from 524. and pickups in millions at seasonally adjusted annual rates. U.S. Consumer Confidence 18 16 14 12 10 8 6 4 2 0 2006 2007 2008 2009 2010 2011 Consumer confidence (right scale) "Cash For Clunkers" 135 120 36. New U.000 4.S. Bureau of Economic Analysis early in the month.000 8. and SUVs). and pickups in millions at seasonally adjusted annual rates.000 Blue bars = vehicle sales* (left scale) Red line = rail carloads (right scale) correlation = 94% 14 12 10 8 6 4 2 0 2006 2007 2008 2009 45 30 15 0 12. up from 11. SUVs. U.5 million in June 2011.000 32.000 20. GDP.July 2011* (Seasonally-Adjusted Annualized Rate in Millions) 20 18 16 14 12 10 8 6 4 2 Annualized U. Light Vehicle Sales vs. What is it and why is it important? Data cover U. SUVs. the increase was welcome.NEW LIGHT VEHICLE SALES Who releases it and when?   The U.S. but sales remain below where they were from November 2010 through April 2011 (see chart at right).0% over June 2011’s 11.000 28.5 million and up 4. including pickups and SUVs. Light Vehicle Sales vs. Where to go for more information:  BEA data on auto sales are here. Meanwhile. Class I railroad revenue came from hauling autos and auto parts.S.000 in June 2011 to 504. which rose from 525. minivans. To be sure.000 16.S.S.  The increase in sales of light vehicles 0 2011 2006 2007 2008 2009 2010 in July was entirely due to higher sales of light trucks (defined as *Data include passenger cars.S. light vehicle sales.2 million. pickups. SUVs. 2006 . Light Vehicle Sales: Jan. BEA  The chart above left shows the very close correlation between consumer confidence and U. Over the past 50 years. Monthly auto sales are often referred to in terms of seasonally-adjusted annualized rates (SAAR). July 2011’s sales were up 5.

West.000. which is subject to revision. Housing starts were up in all four regions (South. Rail Time Indicators – August 5. housing historically 10% has accounted for around 5% of U. 20%  As we note above. Northeast.250 2. and appliances. More recently. as they did in June 2011 when they totaled 629. What is it and why is it important? A housing start is beginning the foundation of a residential home. Things are so bad today that it’s good news when they exceed 600. etc. and Midwest) SingleFamily May '11-June '11 June '10-June '11 MultiFamily Total 14.S.S. In the past. However. shop at garden centers. each new house Source: Census Bureau generates about three full-time jobs. various factors affecting today’s housing market — including a huge oversupply of existing houses due to slow sales and widespread foreclosures — means that new construction is a big drag on the economy today.7% 9.6% 16. it was a disappointment. it’s no surprise that the big decline in new home construction in recent years has had a huge impact on unemployment. Thus. both in the construction sector directly (see the chart on the top left of the next page) and in other sectors indirectly. Thousands) 2.500 1.000 750 500 250 0 2006 2007 2008 2009 2010 2011 Source: Census Bureau  What are the latest numbers?  Not too many years ago. was 14. June 2011 actually had the highest year-over-year increase since April % Change in U. 16.June 2011 (Seasonally-Adjusted Annualized Rate.HOUSING STARTS Who releases it and when?   U.7% higher than June 2010. -50% maybe get a lawn service. if monthly housing starts weren’t around two million on an annualized basis.8% Total Single-family units Multi-family units  The chart nearby shows the percentage change in year-over-year housing starts by month since 2006.8% 0.000 1. Housing Starts From the Same 2010.June 2011 few economic indicators in recent 50% 40% months that came in better than 30% generally expected. lawn and garden supplies. 0% -10% GDP directly and also has important -20% spillover effects — people who buy -30% new homes also usually buy new -40% appliances. Census Bureau.S. Housing Starts: January 2006 . though.6% higher than May 2011.250 1.4% 31. -60% According to the National Association 2011 2007 2009 2010 2006 2008 of Home Builders. It was also one of the relatively Month Previous Year: Jan. The chart makes clear that 2006 through 2009 were terrible years.S. June 2011’s figure.500 2. U. since people buying new homes tend to spend on other goods such as furniture. housing starts have usually been considered a “leading indicator” because construction growth usually picks up at the beginning of a business cycle. around the middle of each month. 2011 Page 34 of 37 . housing has directly accounted for around 5% of the overall economy and has large spillover effects on other sectors (such as retail sales and manufacturing). 2006 . and the highest level since January 2011 (see chart at right).750 1.000.4% 104. Historically.

Rail carloads are average weekly originations for the month and include Canadian traffic. 2 Rail Time Indicators – August 5.June 2011 8.000 10. in 000s) correlation = 85%  A recent story in The Washington Post on housing data reflects the on-the-one-hand. 2011 Page 35 of 37 . In July 2011.000 2006 2007 2008 2009 2010 2011 Data are based on seasonally-adjusted numbers.June 2011 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% 2006 2007 2008 2009 2010 2011 18. suggesting that housing starts in July 2011 could be higher too. Census Bureau Month-To-Month Change in New Homes Under Construction: January 2006 . who’s not impressed.S. Employment in the Construction Industry 2.000 20. Housing Starts vs. Not everyone is convinced.000 3.200 800 400 0 Housing starts (left scale.400 30. The Washington Post.200 5. we like to look at rail carloads of lumber and forest products.”2 The housing depression can’t last forever.000 1.000 1. Source: AAR. July data will be released on August 16. The story quotes Brian Wesbury.000 -40.000 6.000 12.S. which over the past several years have been very closely correlated with housing starts (see chart below right).400 2.000 -30. wood and forest products were up 5. Housing Starts From the Same Month Previous Year: Jan.000 Construction employment (right scale.000 -50. as saying that June marks “the beginning of a recovery in housing” that “will last for many years into the future. July housing starts will be released August 16. Wood & Forest Products 2. Source: Census Bureau Housing starts (left scale.000 -20. Census Bureau Where to go for more information:  The Census Bureau’s press release on housing starts in June 2011 is here. July 19. Housing starts are monthly figures annualized. chief economist at investment advisory firm First Trust.600 5. U. See “Housing starts surge in June. for the first time since May 2006.600 1.S. Source: BLS. For our part. in 000s) correlation = 98%  % Change in U. 2006 .400 -10. Housing starts are monthly figures annualized. though.200 800 400 0 2006 2007 2008 2009 2010 2011 Data are seasonally adjusted.000 15. He says “we’ve had proclamations that ‘this has been the bottom’ before and it hasn’t amounted to much. U. on-theother-hand challenge inherent in many economic indicators.6% on a seasonally adjusted basis to their highest level of the year. The Post story also quotes Mike Larson of Weiss Research. Housing Starts vs.000 9. the number of homes under construction (houses that were started but are not yet completed — it’s a figure that’s released at the same time as housing starts) rose from the previous month (see chart above right). 2011. + Canadian Rail Carloads of Lumber.S. 000s) 6.000 7. and maybe it’s true that the improvement in June is the start of something better to come. Wesbury is optimistic because in June 2011.000 0 2006 2007 2008 2009 2010 2011 Source: Census Bureau Data are seasonally adjusted.400 2. rail carloads of lumber. This means that more new homes were started in June than completed.000 4.800 0 6.600 Rail carloads (right scale) 1.” Mr.U.” by Cezary Podkul.

Food and energy prices are typically more volatile than other prices due in part to their susceptibility to external shocks. The overall consumer inflation rate today is lower than it was in 2008. Just one example: inflation confuses price signals — producers don’t know if higher prices are simply part of an inflation-related adjustment or if they signal higher demand that warrants expanded production.5% 1. CPI excluding food and energy — so-called “core” CPI — was up 0.0% -1. although BLS publishes hundreds of CPI indexes each month.June 2011* 1.S.S. especially the summer and fall of 2008. The BLS collects prices from more than 20.6%. It is believed that the Federal Reserve regards inflation of 1. but inflation can harm economies in many ways. Source: Bureau of Labor Statistics Where to go for more information:  The BLS press release on the June 2011 CPI is here. federal retirement payments.0% -0. many private pensions. Source: Bureau of Labor Statistics  Month-to-Month Change in the Consumer Price Index: January 2006 .S. the CPI for July will be released August 18. its biggest increase since December 2009 (see the line in the chart below right). its first decline in a year (see chart below left). For the 12 months ending in June 2011. Bureau of Labor Statistics (BLS) releases the data mid-month.S.0% 2006 2007 2008 2009 2010 2011 *Urban consumers. economy.5% to 2% to be about right for the U. 2011 Page 36 of 37 . Over the 12 months ending in June 2011. city avg.5% -2. What is it and why is it important? The CPI is the benchmark inflation guide for the U.0% Blue bars = overall Red line = excluding food and energy 3% 2% 1% Blue bars = overall Red line = excluding food and energy 0% -1% -2% -3% 2006 2007 2008 2009 2010 2011 *Urban consumers.    What are the latest numbers?   The overall consumer price index fell 0.25% in June 2011.5% 0. and food stamps.CONSUMER PRICE INDEX (CPI) Who releases it and when?   The U. overall CPI rose 3.June 2011 6% 5% 4% 0.000 retail and service establishments throughout the country. but note the big increase since the beginning of 2011 (see chart below right). The “CPI for All Urban Consumers” (CPI-U) is the inflation index most often reported by the media.5% -1. Year-Over Year Change in the Consumer Price Index*: January 2006 . U. Rail Time Indicators – August 5. seasonally adjusted. slightly lower than the corresponding figure for May 2011 (see the line in the chart below left). It measures the changes in the cost of a representative basket of consumer goods and services. U. The CPI-U or a related index is the basis for cost-of-living adjustments for Social Security. A sharp drop in the price of gasoline was the biggest factor behind the decline.2% in June 2011. city average. It’s hard not to have at least a little inflation when an economy is growing.S. the same rate as May 2011 and equal to the highest annual rate since October 2008. CPI excluding food and energy was up 1.6%. economy. The “core” CPI — defined as CPI less food and energy — is also commonly used.

510 cars scrapped or otherwise removed yields 126. From July 2009 through July 2011.org. Rail cars are stored when they are not needed due to lack of demand. North American Freight Cars in Storage 550.135  Where to go for more information:  Contact Frank Hardesty (fhardesty@aar. Our best estimate is that.510 126. Rail Time Indicators – August 5. Figures are for the entire North American rail freight car fleet and include rail cars owned by railroads.645.000 -35.688 cars in the North American fleet.510 527. that was down to 290. leasing companies. while 110.000 10. % are cars stored as % of total fleet.  What are the latest numbers?  As of August 1.000 May-Dec '09 2010 2011 Mar. How Has the Car Fleet Changed? # of Cars* Freight cars in the fleet July 1. yielding a net reduction of 70. 1. To the extent that railroads are able to improve freight car utilization. 2011. Media inquiries should go to Holly Arthur (harthur@aar. and others. Source: AAR  In July 2009.000 350.RAIL FREIGHT CARS IN STORAGE Who releases it and when?   The Association of American Railroads each month in Rail Time Indicators. they come out of storage when demand improves. 276.195 70.9% of the fleet North American Freight Cars Out of Storage 15.822 new cars were installed. shippers. Subtracting the 110. 2011.000 -30.645 110. 39.000 400. 2011 = difference in cars in storage on Feb. 2009 (including cars that haven’t moved since before 2005). '2009 2010 2011 Data are as of the first of the month.000 0 -5. *Includes all cars regardless of when last moved loaded **Preliminary based on build date July 2009-July 2011. 2011 compared to cars in storage on Jan. 2011 Page 37 of 37 . in the past when the economy and the rail industry were at their healthiest.org. By August 1.602. 527.2% of the fleet -15.532.060 290. Source: AAR Figure for Jan. 2011.000 250. 1.060 cars were in storage on July 1. 1.135 freight cars returned to service. 2011 Net reduction in cars in storage Cars scrapped or otherwise removed Cars returned to service 1. What is it and why is it important? A freight car is “in storage” if it has had a loaded revenue move since 2005.-Dec.000 450.000 200.688 39. 1.415. for a reduction of 236. 2009 Aug. 2011 Net reduction in car fleet New cars installed** Net cars scrapped/otherwise removed Cars in storage July 1.000 500. The total freight car fleet changes from month to month as new cars are added and old cars are scrapped.000 -10. 202-639-2344).415 236.000 31.883 1.603 million cars were in the fleet. up 707 cars from the month-earlier level and equal to 18. a freight car that goes into storage does not necessarily ever come out of storage. but not in the past 60 days.510 cars were scrapped or otherwise removed.000 n/a 18.2% of the North American fleet (see charts below).000 -20.000 300. 2009 July 1.000 5.822 110.943 freight cars were in storage.000 -25. other months calculated similarly. they will need fewer of them for the same level of traffic. 202639-2321). 2%-3% of freight cars were in storage. For various reasons.