Taps Coogan – December 28th, 2020

According to the Association of American Railroads, total cargo traffic on US railroads has been up year-over-year every week since the beginning of October.

While carload volume (bulk cargo such as coal or grain) is still lagging 2019 moderately, surging intermodal volume (shipping containers, i.e manufactured goods) has more than made up for the difference.

This speaks to one of the most peculiar features of this pandemic-recession. Despite the sharpest decline in economic activity on record, the biggest jump in unemployment since the Depression, and the biggest increase in the US savings rate ever, spending on most categories of goods is through the roof. The money for that spending has come from the various stimulus programs passed throughout the year, debt forbearance, and a reduction in spending on services like hospitality and dinning.

Personal Consumption Expenditures: Durable Goods

Beyond keeping shipping companies, online retailers, and the railroads busy, it’s questionable how much good all that spending will end up doing for the economy considering that the overwhelming majority of the products are made overseas.