Buffett's favorite economic indicator. . .
. . .is freight car loadings . If it is accurate the news is good. I was running an errand this week and a train held up traffic on Thornwood Drive for 15 minutes. The train was loading (or unloading) freight so I simply smiled, happy for the economic activity.
The freight indexes are great indicators of what is going to happen. They usually run about 3 months ahead of the financial action. Rail of course, takes longer than trucking indexes to see the effect.
I learned something interesting in boom times about this though. It is what is being shipped that is the most important factor, not just the fact that something is moving. Just before the economy started taking a nosedive, there was a large uptick in the freight numbers, but do you know what the freight was? It was massive unprecedented amounts of scrap metal going to China. The price on scrap had skyrocketed and sellers were moving it as fast as they could.
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