Tuesday, January 21, 2020

Truck tonnage update

Over the years I've had numerous posts featuring Truck Tonnage, as calculated by the American Trucking Association. I've used it as a proxy for the physical size of the economy, and over time it's had an amazing ability to track the rise in equity prices. Unfortunately, over the past year it's also been unusually volatile, and this has detracted from its reliability. To correct for what I surmise is faulty seasonal adjustment in the series, of late I've used a 3-month moving average. The December datapoint was released today, so I have updated my chart and included a chart of the raw data.

Chart #1

Chart #1 shows the raw data as released by the ATA (white line), and its 3-mo. moving average (magenta). Note the unusual volatility this past year. The rise in truck tonnage has been muted over the past year, and at best is suggestive of a deceleration in economic growth (and at worst an indication of a stagnant economy in 2019). That's not a great revelation, however, since we've had plenty of evidence that the economy—especially manufacturing activity—was negatively impacted by Trump's tariff wars.

Chart #2

Chart #2 compares the 3-mo. moving average of Truck Tonnage with the S&P 500 index. For most of last year, truck tonnage was suggesting that the equity market was overly cautious given continuing growth in trucking activity. For now, it would appear that the equity market has "caught up" with truck tonnage. Unless and until trucking activity picks up, the chart now suggests that the upward momentum of equity prices is likely to fade.

UPDATE: Today also saw the release of another timely indicator of economic activity: the Chemical Activity Barometer (for an earlier post on this subject see here). After being relatively flat for the previous 18 months, it turned up convincingly in January (see Chart #3). An increase like this suggests that industrial production—which was flat to down last year—will begin to rise in coming months (see Chart #4).

Chart #3

Chart #4

6 comments:

JDonley said...

Excellent work.....your charts are so easy to interpret. thank you for not posting charts with multiples of lines.

Jason D said...

Celladon & Swift (10,000 Trucks) filed for bankruptcy. How will this impact truck tonnage?

Benjamin Cole said...

As always, top blogging.

I love it when a red line is called "magenta." I feel erudite just reading such a description.

On manufacturing, keep in mind Boeing has been sidelined for months and months due to the 737 Max debacle. Trump's trade tariffs have been made into a mountain, but are in fact are molehills.

Also, the US dollar has appreciated by about 30% since 2008, against a basket of other currencies. One can say the dollar only reassumed the value that it had pre-2008, but nevertheless US manufacturers have been swimming upstream for 10 years.

I hope Trump is successful in his bid to encourage more buying of US product by mainland China. Too soon to tell now, but the early innings suggest he has been successful in his trade policies.

The Cliff Claven of Finance said...

Railroad intermodal units slightly leads truck tonnage, although both are coincident indicators that do not tell one much about the future economy.

https://www.aar.org/news/rail-traffic-for-the-week-ending-january-18-2020/

Al said...

Cliff stop being a one up guy and also being negative.

If you don’t like the post just don’t reply.

Thanks

naive investor said...

Scott, you have passed some epidemic’s drops of the market. What is your view on this one?