MaxedOutMama
Friday, July 13, 2007
Eye On The Ball: Truck Tonnage May
Trucking isn't seeing a mfrg expansion either:
But right now, with reported manufacturing job losses, etc, and declines in measures of real activity, it doesn't really seem to have materialized yet.
Costello said one of the primary reasons for the continued year-over-year index contractions is that manufacturing activity by weight, not value, fell again in May. Manufacturing activity declined 1.4 percent when compared with the same month in 2006. This marked the seventh consecutive month that this weight-based manufacturing measure fell.Rail figures are poor too. Through June:
“The fact that the year-over-year comparison for truck tonnage worsened to a negative 3.6 percent from April’s minus 2.7 percent is troubling,” said Costello. “We fully anticipated a contraction, but the fact that it deteriorated may mean that more volatility is in store. Unfortunately, we won’t have a good feel for the direction of volumes until we see June’s data.”
Trucking serves as a barometer of the U.S. economy because it represents nearly 70 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.
U.S. freight railroad carload traffic fell 2.7 percent in June 2007 compared with June 2006, while intermodal traffic fell 1.8 percent compared with the same month last year, the Association of American Railroads (AAR) reported today.June decline in metals may well mean a manufacturing slowdown, IMO. What we are hoping for, since consumers are not resilient at all, is that the global economy is and that US manufacturing and global industry gradually picks up as we sell more to the rest of the world in order to compensate for poor sales to the consumer side of the economy.
...
In the second quarter of 2007, total U.S. rail carloadings were down 3.3 percent (147,011 carloads) to 4,305,761 carloads, while intermodal traffic, which consists of trailers and containers on flat cars and is not included in carload figures, was down 2.6 percent (81,992 units) to 3,013,336 trailers and containers.
...
Total volume through the first half of 2007 was estimated at 857.9 billion ton-miles, down 2.8 percent from the first 26 weeks of 2006.
But right now, with reported manufacturing job losses, etc, and declines in measures of real activity, it doesn't really seem to have materialized yet.
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MOM
From the July California Finance Report:
"Sales and use tax receipts were $315 million below the month’s forecast of $2.98 billion, which represents a year-over-year decline of 6.9 percent. Sales tax receipts had been tracking forecast for the first 11 months of the fiscal year. At this time it is not known if the swing in June is a precursor of underlying weakness in taxable sales. June represents the second prepayment for second quarter sales. A more complete picture of second quarter sales will be available in mid-August, when all of the second quarter receipts have been processed. Year-to-date, the sales tax cash is $283 million less than anticipated."
CA is following FL off the spending cliff. Keep in mind CA is wanting to issue $43 bil in bonds for state projects and that "govt" is one of the fastest growing employers in CA. They are set up for a huge fall as sales tax and property tax revenues hit the wall.
ww
From the July California Finance Report:
"Sales and use tax receipts were $315 million below the month’s forecast of $2.98 billion, which represents a year-over-year decline of 6.9 percent. Sales tax receipts had been tracking forecast for the first 11 months of the fiscal year. At this time it is not known if the swing in June is a precursor of underlying weakness in taxable sales. June represents the second prepayment for second quarter sales. A more complete picture of second quarter sales will be available in mid-August, when all of the second quarter receipts have been processed. Year-to-date, the sales tax cash is $283 million less than anticipated."
CA is following FL off the spending cliff. Keep in mind CA is wanting to issue $43 bil in bonds for state projects and that "govt" is one of the fastest growing employers in CA. They are set up for a huge fall as sales tax and property tax revenues hit the wall.
ww
# posted by 
: 11:53 AM
: 11:53 AM 
FL is in real trouble. I know that.
I honestly don't see how CA is going to do it. They have way too many public financing problems.
But I'll give you an example of another state that is in trouble. NJ. Top offender. Public pensions, way too high property taxes, which are going to hurt their local economy and home values considerably, and lagging job growth for years.
The RE boom supported a lot of state and local budgets. The growth in state and local spending has been quite large and even now is one of the areas shoring up employment and construction. The swing for those governments is going to produce A LOT of pain.
I think AZ is going to experience some difficulties as well.
I honestly don't see how CA is going to do it. They have way too many public financing problems.
But I'll give you an example of another state that is in trouble. NJ. Top offender. Public pensions, way too high property taxes, which are going to hurt their local economy and home values considerably, and lagging job growth for years.
The RE boom supported a lot of state and local budgets. The growth in state and local spending has been quite large and even now is one of the areas shoring up employment and construction. The swing for those governments is going to produce A LOT of pain.
I think AZ is going to experience some difficulties as well.
I agree with you on NJ.
I see FL, CA, NV, AZ, MA, Virginia & DC area all having the same problem. But CA is so large that for them and FL to go 5-6% below last year (in nominal dollars no less), the rest of the country would have to be on fire just to achieve any positive growth overall.
These states have been used to double digit revenue increases and have spent every penny and more. Now sales taxes are running negative, and when property taxes come in less next year due to foreclosures and lower values, they (and we) are going to hit a pretty vicious downward cycle.
The bulls keep saying that business investment will keep us out of a recession. We in Texas are so over retailed it is incredible. Two drugstores on every corner. I personally look for weakness in Commercial RE (outside of NYC) to start showing in the economic statistics very soon; the cap rates and rate assumptions they are using in their projections now are fantasy. Businesses do not spend on capital investment when sales are flat/declining.
ww
I see FL, CA, NV, AZ, MA, Virginia & DC area all having the same problem. But CA is so large that for them and FL to go 5-6% below last year (in nominal dollars no less), the rest of the country would have to be on fire just to achieve any positive growth overall.
These states have been used to double digit revenue increases and have spent every penny and more. Now sales taxes are running negative, and when property taxes come in less next year due to foreclosures and lower values, they (and we) are going to hit a pretty vicious downward cycle.
The bulls keep saying that business investment will keep us out of a recession. We in Texas are so over retailed it is incredible. Two drugstores on every corner. I personally look for weakness in Commercial RE (outside of NYC) to start showing in the economic statistics very soon; the cap rates and rate assumptions they are using in their projections now are fantasy. Businesses do not spend on capital investment when sales are flat/declining.
ww
# posted by : 7:55 PM
: 7:55 PM
Interesting you should mention that. About two months ago I started following five states that have an amazing amount of the population:
CA, 36.1 million
FL, 17.7
MI, 10.1
OH, 11.4
PA, 12.4
They have about 88 million population in total, or 29% of the total.
The average person should think of this in terms of the every-four-year electoral count. It kind of works the same way economically.
Anyway, I've been tracking them, and I agree with you. Too many of the economic load-bearing struts are giving way, placing too much stress on the rest.
BLS state unemployment rates
Unemployment for those states according to BLS:
CA: 5.2
FL: 3.4
MI: 6.9
OH: 5.7
PA: 4.2
Mike Thomas on FL funk is a pretty accurate picture of the situation. More and more people seem to be leaving Florida. From what I'm seeing of the GA refugees, they are the type of people a state doesn't want to lose. Florida always has a low unemployment rate, because the state has so many retirees.
From the May Florida tax collection report (pdf):
Corporate income tax was 14.3% behind estimate. Sales and Use Tax was 4.35% behind estimate. On page 3 there is a graph showing SUT by category which also gives year over year comparisons. One look at that and you realize Florida's economy is in deep doodoo. Business investment related SUT down ~5%? Yikes!!!
PA seems to be a mixed picture, but I do try to check on it and it sounds like things are getting a lot rougher in the northern areas. I'm not sure about the western area. Southern seems okay. From the end of June 2006 to the end of June 2007, PA gained about 50,000 UI jobs. PA taxes (second item currently) are a mixed picture. Business related tax collections are up, but on a closer look:
Secretary Wolf noted that overall revenue collections are above estimate for the fiscal year — mostly due to higher-than-anticipated collections in corporate and personal income taxes — which show that the Pennsylvania economy is continuing to grow and create jobs. Also, a one-time, unanticipated corporation tax settlement in November 2006 increased fiscal year collections by $42 million.
Wolf said several taxes are below estimate for the year, including the sales, realty transfer and inheritance taxes. Realty transfer taxes have lagged below estimate through the 2006-07 fiscal year because of the declining housing market. Combined, these three taxes are $77.2 million
below estimate for the year.
“Early indications are that the strong economic and revenue growth Pennsylvania experienced this fiscal year will continue into 2007-08, but at a slightly slower pace,” said Wolf. “The growth we’ve seen this year in the corporate and personal income taxes is in capital gains – an income category that is volatile from year to year.”
Higher capital gains tax collections and lower sales taxes is not a really wonderful combination. Taking my Fab Five altogether, especially when I look at my other edge areas, the picture is worsening rapidly.
I utterly agree with you about the problem with business investment. A great deal of business investment has been related to sales and service, and in this environment, that is going to continue to drop!!
CA, 36.1 million
FL, 17.7
MI, 10.1
OH, 11.4
PA, 12.4
They have about 88 million population in total, or 29% of the total.
The average person should think of this in terms of the every-four-year electoral count. It kind of works the same way economically.
Anyway, I've been tracking them, and I agree with you. Too many of the economic load-bearing struts are giving way, placing too much stress on the rest.
BLS state unemployment rates
Unemployment for those states according to BLS:
CA: 5.2
FL: 3.4
MI: 6.9
OH: 5.7
PA: 4.2
Mike Thomas on FL funk is a pretty accurate picture of the situation. More and more people seem to be leaving Florida. From what I'm seeing of the GA refugees, they are the type of people a state doesn't want to lose. Florida always has a low unemployment rate, because the state has so many retirees.
From the May Florida tax collection report (pdf):
Corporate income tax was 14.3% behind estimate. Sales and Use Tax was 4.35% behind estimate. On page 3 there is a graph showing SUT by category which also gives year over year comparisons. One look at that and you realize Florida's economy is in deep doodoo. Business investment related SUT down ~5%? Yikes!!!
PA seems to be a mixed picture, but I do try to check on it and it sounds like things are getting a lot rougher in the northern areas. I'm not sure about the western area. Southern seems okay. From the end of June 2006 to the end of June 2007, PA gained about 50,000 UI jobs. PA taxes (second item currently) are a mixed picture. Business related tax collections are up, but on a closer look:
Secretary Wolf noted that overall revenue collections are above estimate for the fiscal year — mostly due to higher-than-anticipated collections in corporate and personal income taxes — which show that the Pennsylvania economy is continuing to grow and create jobs. Also, a one-time, unanticipated corporation tax settlement in November 2006 increased fiscal year collections by $42 million.
Wolf said several taxes are below estimate for the year, including the sales, realty transfer and inheritance taxes. Realty transfer taxes have lagged below estimate through the 2006-07 fiscal year because of the declining housing market. Combined, these three taxes are $77.2 million
below estimate for the year.
“Early indications are that the strong economic and revenue growth Pennsylvania experienced this fiscal year will continue into 2007-08, but at a slightly slower pace,” said Wolf. “The growth we’ve seen this year in the corporate and personal income taxes is in capital gains – an income category that is volatile from year to year.”
Higher capital gains tax collections and lower sales taxes is not a really wonderful combination. Taking my Fab Five altogether, especially when I look at my other edge areas, the picture is worsening rapidly.
I utterly agree with you about the problem with business investment. A great deal of business investment has been related to sales and service, and in this environment, that is going to continue to drop!!
With regard to PA, one of the things boosting its economy may be refugees from NJ. This isn't a plan that other states can duplicate ...
As for CA, I used to live there. When Gov. Schwartzenegger was elected, he tried to rein in state spending, and the public employee unions, with the cooperation of the media, effectively defeated him. As far as I can see, he's basically given up on reforming state spending. CA may have passed the point where the people (at least those in public employment) are able to vote themselves money from the public treasury. It will be interesting to see if CA can survive. (I moved out about 2 years ago, in part because of this.)
I'm not so sure about NJ politics, but CA had a governor who tried and was defeated.
As for CA, I used to live there. When Gov. Schwartzenegger was elected, he tried to rein in state spending, and the public employee unions, with the cooperation of the media, effectively defeated him. As far as I can see, he's basically given up on reforming state spending. CA may have passed the point where the people (at least those in public employment) are able to vote themselves money from the public treasury. It will be interesting to see if CA can survive. (I moved out about 2 years ago, in part because of this.)
I'm not so sure about NJ politics, but CA had a governor who tried and was defeated.
# posted by : 9:29 PM
: 9:29 PM
MOM
What is the reason you are following those particular 5 states?
I follow 7 states very closely looking for what consumer spending is doing. Fed numbers get revised so much they are not much help. Sales tax numbers are cash, and demonstrate what the consumer (and a lot of business capital spending) is actually spending regardless of what his income is (includes MEW and other sources of borrowing).
States I follow are
CA
TX
NY
FL
IL
PA
OH
I use this sample to tell me what is going on in the US overall as these states are the top 7 GDP producers in the US.
Your trucking and rail information is consistent with data points that the consumer is starting to seriously roll over. May was the month that a large increase in ARM resets began (and will continue), so it makes logical sense that the consumer had to get the cash from somewhere. Once this becomes more evident, the stock market decline will soon follow. I think earnings are going to be disappointing.
ww
What is the reason you are following those particular 5 states?
I follow 7 states very closely looking for what consumer spending is doing. Fed numbers get revised so much they are not much help. Sales tax numbers are cash, and demonstrate what the consumer (and a lot of business capital spending) is actually spending regardless of what his income is (includes MEW and other sources of borrowing).
States I follow are
CA
TX
NY
FL
IL
PA
OH
I use this sample to tell me what is going on in the US overall as these states are the top 7 GDP producers in the US.
Your trucking and rail information is consistent with data points that the consumer is starting to seriously roll over. May was the month that a large increase in ARM resets began (and will continue), so it makes logical sense that the consumer had to get the cash from somewhere. Once this becomes more evident, the stock market decline will soon follow. I think earnings are going to be disappointing.
ww
# posted by : 9:21 AM
: 9:21 AM
I picked those to round out a county sample that I am using.
I was looking for enough variety to catch what's really happening. I've always noticed a seeming lag in the fed numbers compared to what happens on the ground.
I've been driving around, and it looks really sobering. Traffic must be lightening up quite a bit. One thing I noticed was dropping hotel prices in NC. Not good.
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I was looking for enough variety to catch what's really happening. I've always noticed a seeming lag in the fed numbers compared to what happens on the ground.
I've been driving around, and it looks really sobering. Traffic must be lightening up quite a bit. One thing I noticed was dropping hotel prices in NC. Not good.
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