$$ Rail Traffic Continues To Raise

Total N. American rail traffic rose to 692.5k cars last week making it the best week in the past two years. When we combine this with what we are seeing in temporary employment trends, the two data points back the view I hold that not only is a “double dip” not likely, but now becoming a highly remote scenario.

Also, The Conference Board Help Wanted Online Index continues to trend higher with a Sept 2010 gain of 59,900. Fears that the economy is not in recovery or is stalling or is doing something else other than recovering are misplaced with this type of data. Demand tends to start slowly and then it accelerates exponentially till most recognize that the economy has recovered.

The growing gap here may be the unintended consequence of extending unemployment benefits seemingly indefinately. It becomes advantageous in many cases to remain unemployed rather than go back to work.

What could derail the recovery? Trade war, letting all tax cuts expire or large scale natural disaster. In other worlds policy makers do something unfathomably stupid (not totally out of the question) or we get the old “act of god”. So barring a man made or natural disaster, things should continue on a steady but unspectacular path.

Note: Be careful looking at the “rate of YOY change” going forward in economic results. Remember Q3 and Q4 2009 GDP rose 3% and 5% respectively. While absolute number will continue to rise, the “rate of change” ought to fall. That will make the graphs that measure that data point look like they are going the wrong direction and give the doomsday crowd (Rosenberg, Roubini et al) ammo to tell us everything is going to shit. So I expect the rate of change to fall while the base YOY numbers keep rising. As usual expect slowdown in the fall around Holiday weeks, normal and no need to panic.

I would expect Q3 GDP to be released Oct 29th to be in the 2.25%+ range (I have no idea what the current guesstimates are) simply based on the data I get from these. Import/Export number had a huge effect on Q2 GDP so they are a wild card. If their effect is somewhat normal, things should look pretty good.

Here is the chart: