by Calculated Risk on 2/08/2013 02:57:00 PM

From the Association of American Railroads (AAR): AAR Reports Mixed Rail Traffic for January, and Week Ending February 2

Intermodal traffic in January 2013 totaled 1,168,630 containers and trailers, up 5.3 percent (58,303 units) compared with January 2012. Carloads originated in January totaled 1,339,604 carloads, down 6.3 percent (90,199 carloads) compared with the same month last year. Carloads excluding coal and grain were up 1.8 percent (12,731 carloads) in January 2013 over January 2012.

In January, six of the 20 commodity groups posted increases compared with the same month last year, including: petroleum and petroleum products, up 54.1 percent or 22,892 carloads; crushed stone, gravel and sand, up 6.1 percent or 4,732 carloads, and lumber and wood products, up 14.6 percent or 2,032 carloads. Commodities with carload declines in January were led by coal, down 14.5 percent or 91,593 carloads; grain, down 11 percent or 11,337 carloads, and iron and steel scrap, down 18.7 percent or 4,675 carloads.

“The New Year brought a continuation of an old pattern: weakness in coal, strength in intermodal and petroleum products, and mixed results for everything else,” said AAR Senior Vice President John T. Gray. “Railroads recently announced that they expect to reinvest significantly in 2013 — an estimated $24.5 billion for the year — back into their systems. They’re making these investments because they are confident that demand for freight transportation, over the long term, will continue to grow.”
emphasis added

Click on graph for larger image.

This graph shows U.S. average weekly rail carloads (NSA).  Green is 2013.

In non-seasonally adjusted terms, U.S. railroads averaged 267,921 carloads per week in January 2013 — for a total of 1,339,604 carloads for the month — down 6.3% (90,199 carloads for the month) from January 2012. In percentage terms, it was the biggest year-over-year monthly decline since November 2009.

If you’ve been paying any attention at all for the past year, you can probably guess the main reason why overall carloads were down in January. Coal carloads totaled 538,878 for the month, down 14.5% (91,593 carloads) from January 2012. ...

Excluding coal and grain, U.S. rail carloads were up 1.8% (12,731 carloads) in January 2013 over January 2012

Note that building related commodities were up.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Graphs reprinted with permission.

Intermodal traffic is near peak levels (black line).

U.S. railroads originated 1,168,630 intermodal containers and trailers in January 2013, up 5.3% (58,303 units) over January 2012 and an average of 233,726 per week. That’s easily the highest weekly average of any January in history.

Intermodal will probably set a new record in 2013.

by Calculated Risk on 2/08/2013 12:58:00 PM

Just an update ... during the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic has recovered to a new record high in 2012.

However convention attendance was only up 1.6% from 2011 and is about 21% below the peak level in 2006.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale). 

There were 39,727,022 visitors to Las Vegas in 2012, just above the previous record of 39,196,761 in 2007.

Convention attendance was at 4,944,014 in 2012, still well below the record of 6,307,961 in 2006.

So it looks like the gamblers are back ...

by Calculated Risk on 2/08/2013 10:31:00 AM

Last week I posted an article from Trulia chief economist Jed Kolko: Here are the “Missing” Construction Jobs.  Here is another projection from Merrill Lynch economist Michelle Meyer: Construction Coming Back

One of the puzzles last year was the lack of hiring in the construction sector. Despite a 25% gain in housing starts, only a net 18,000 construction jobs were added for the year. This seemed too low, and we learned that evidently it was. The revisions yielded another 73,000 construction jobs in 2012 and 75,000 in 2011, bringing the total to 91,000 and 144,000, respectively.

We think construction hiring will ramp up this year. The best way to forecast construction jobs is to look at the lagged impact of housing starts or residential investment. This comparison is easiest if we adjust construction employment for the size of the labor force. We find that the correlation between construction jobs and housing starts is the highest at 72% when housing starts are lagged by five quarters (Chart 2). Since housing starts reached a trough in 1Q11, construction jobs should have turned higher last spring. We saw some gains, but only very modest ones (which we learned after last month’s revision). The gain in housing starts accelerated in 2012, suggesting a faster pickup in construction jobs this year.

Click on graph for larger image.

Timing the turn is much easier than estimating the magnitude, however. The historical comparison is imperfect because we are not controlling for variablessuch as the change in the average size of homes, types of properties (apartment vs. single family) and labor productivity. From the mid-1990s through the bubble, there was a shift toward greater single family homes, which tend to be more labor-intensive than apartments. During the last few years of the bubble, there was an increase in the share of “McMansions” that also required greater labor. As such, the gain in construction jobs outpaced housing starts during this period. We would argue the reverse is true today as households are looking to downsize, either into apartments or smaller single-family properties. The gain in construction jobs may therefore be slower than implied by the historical comparison.

Plugging in our forecast for housing starts through 2014 and lagging five quarters, we think it is reasonable to expect gains of about 225,000 to 250,000 construction jobs this year, which implies nearly 20,000 a month on average (again see Chart 2). We judge this to be a conservative estimate and see upside risk given improvement in renovation spending.

by Calculated Risk on 2/08/2013 08:26:00 AM

The Department of Commerce reported:

[T]otal December exports of $186.4 billion and imports of $224.9 billion resulted in a goods and services deficit of $38.5 billion, down from $48.6 billion in November, revised. December exports were $3.9 billion more than November exports of $182.5 billion. December imports were $6.2 billion less than November imports of $231.1 billion.

The trade deficit was much smaller than the consensus forecast of $46.0 billion.

The first graph shows the monthly U.S. exports and imports in dollars through December 2012.

Click on graph for larger image.

Exports increased in December, and imports decreased.

Exports are 10% above the pre-recession peak and up 4.8% compared to December 2011; imports are near the pre-recession peak, and down 2% compared to December 2011.

The second graph shows the U.S. trade deficit, with and without petroleum, through November.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The decrease in the trade deficit in December was due to both a decline in petroleum and non-petroleum products.

Oil averaged $95.16 in December, down from $97.45 per barrel in November. But most of the decline in the value of petroleum imports was due to a sharp decline in the volume of imports.

The trade deficit with China increased to $24.5 billion in December, up from $23.1 billion in December 2011. Most of the trade deficit is still due to oil and China.

The trade deficit with the euro area was $7.5 billion in December, down from $8.6 billion in December 2011.

Notes: The trade deficit might have been skewed by the LA port strike that started in late November and ended in early December. This does suggest an upward revision to Q4 GDP.

by Calculated Risk on 2/07/2013 09:00:00 PM

As expected, the payroll tax increase is impacting consumers, from the WSJ: Tax Holiday Ends, Consumers Scrimp

Some early signs suggest [consumers] are tapping the brakes. Surveys show the majority of Americans who are aware of the tax increase say they plan to cut spending, and consumer confidence has wavered. Companies like Target Corp. and women's clothier Cato Corp. say the tax increase has crimped sales.

And from Mark Thoma at EconomistsView: Fed Worried about Bubbles, Not Inflation

With fiscal policy moving in the wrong direction -- deficit reduction rather than employment enhancing stimulus, e.g. infrastructure -- if monetary policymakers begin getting skittish, then the unemployed will lose the one institution that seemed to actually care about their struggles. Not good.

A little less fiscal austerity now - or even some more fiscal stimulus - would take some pressure off of monetary policy.  But that doesn't seem likely.

Friday economic releases:
• At 8:30 AM ET, The Trade Balance report for December will be released. The consensus is for the U.S. trade deficit to decrease to $46.0 billion in December from $48.7 billion in November.

• At 10:00 AM, Monthly Wholesale Trade: Sales and Inventories for December. The consensus is for a 0.3% increase in inventories.