Despite talk of gloom and doom, Canadian export banker sees US growth

BASHING the US economy is a popular sport, says Peter Hall, vice president and chief economist of Export Development Canada (EDC), but transport indicators show the avalanche of gloom and doom is unwarranted.

Analysts look to transportation as a gauge of overall performance, he said. "Across key modes - air cargo, port activity, rail and trucking - there is still a decent amount of growth to date, suggesting that business activity continues to roll along at a respectable pace," said Mr Hall, also chief economist of the EDC, Canada's export bank.

"Shipments by air seem most vibrant. Data only extends through March, but are impressive. Eastern airports saw a 24 per cent annualised gain in the past six months, with the most recent months being the strongest. Los Angeles was up 29 per cent, and Chicago up 40 per cent. These figures are a lot stronger than recent news on the economy suggest," he said.

West coast ports are up 4.3 per cent over last year's levels, he said. "Performance has been volatile in recent months, but the trend is still pointing upward. East coast activity is not as impressive, coming in flat on a year-to-year basis, likely reflecting European weakness," Mr Hall said.

Rail traffic is mixed, but on balance, the story is upbeat, he said, noting that second-quarter intermodal traffic is up 4.2 per cent compared with last year's figures, and the April-June figures were up by an annualised 6.6 per cent over the previous quarter.

"Figures are more modest for trucking. Inflation-adjusted year-on-year growth is decent, at 4.1 per cent, but the latest months show a flattening trend. However, businesses seem sanguine about the most recent figures; heavy-duty truck sales, a well-regarded business activity barometer, are up 27 per cent over last year, and rose 14 per cent in the second quarter alone," he said.

"All told, the numbers are encouraging. Business flows seem to be maintaining a rhythm that suggests recent slowdown hype may be overblown. It may be argued that these flows may just end up in inventories - a possibility, but unlikely, given current just-in-time inventory technology and widespread economic pessimism. What these numbers, along with other key indicators, seem to be reinforcing is the underlying momentum in US economic growth," Mr Hall said.