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6/6/2007



Rail News: Rail Industry Trends

U.S. economy will grow at moderate pace through '07, Federal Reserve chairman says



Class Is have been optimistic that their traffic will rebound in the year’s second half along with the economy. Perhaps their optimism is founded.

The U.S. economy will grow at a moderate pace the next few quarters despite a sluggish residential housing market, according to Federal Reserve Chairman Ben Bernanke. During a speech yesterday at an international monetary conference in Cape Town, South Africa, he said there haven’t been “major spillovers from housing onto other sectors of the economy.”

That’s good news for U.S. railroads, since their lumber and wood product traffic is down 23.4 percent through 2007’s first 21 weeks primarily because of the weak housing market. The roads are registering year-over-year traffic gains in non-metallic minerals, chemicals and petroleum products, and hope to add a few more commodities to that list by year’s end.

“As expected, we have seen a gradual ebbing of core inflation, although its level remains somewhat elevated,” said Bernanke. “Despite recent increases in the prices of crude oil and gasoline, energy prices overall are below last year’s peak … and long-run inflation expectations, as derived from both surveys and market-based measures of inflation compensation, have remained contained.”


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