Railroad giant CEO: The economy isn't booming, but it's not in a recession
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If railroads are a bellwether of the US economy, then CSX Corp. (CSX) CEO Joe Hinrichs doesn't see the economy falling off a cliff because of Trump tariffs — but he doesn't see white-hot demand, either.
"The service economy has been strong and continues to be strong," Hinrichs said in a new episode of Yahoo Finance's Opening Bid podcast (video above or listen below). "The industrial economy has been in a recession for the last couple years."
"So if we can see more industrial growth, production growth, that would be a big deal to the economy and for CSX and to the railroads as well," he continued. "But right now, that's been pretty stagnant. It's not as bad as it was the last couple years."
Hinrichs said the economy isn't booming but is still growing. CSX's order requests haven't declined, signaling there is no lack of demand or a recession.
CSX has roots dating back to 1827 when the Baltimore and Ohio Railroad Company, the nation's first common carrier, was chartered. Today, it operates a 20,000 route-mile rail network that serves 26 states east of the Mississippi River, D.C., and the Canadian provinces of Ontario and Quebec. It ships everything from agricultural products to auto supplies to coal.
Hinrichs joined CSX in September 2022 after spending years leading operations for Ford (F), where he helped to relaunch the Bronco and set up plants around the world. He began his career at General Motors (GM) in the late 1990s.
Rail trends and broader economic data continue to paint differing views on the state of play.
Total carloads for the week ending May 17 were up 7.1% year over year to 229,226 carloads, according to the Association for American Railroads (AAR). For the first 20 weeks of the year, US railroads reported a cumulative volume of 4,354,843 carloads, up 2.2% from the same point last year.
Hinrichs said he thinks CSX will grow its volume this year, consistent with guidance it provided at its first quarter earnings in mid-April.
But the US economy is showing mixed trends at best as tariffs begin to permeate supply chains and corporate financial statements.
Retail giants like Walmart (WMT) and Target (TGT) have warned about higher prices as early as the end of May due to steep tariffs on China. Top execs who spoke to Yahoo Finance have privately voiced concern on the outlook for third quarter earnings, which could be the first full quarter that shows the Trump tariffs' impact on margins.
Read more: What Trump's tariffs mean for the economy and your wallet
The US economy shrank by 0.3% in the first quarter, according to the Bureau of Economic Analysis (BEA). It marked the first contraction since the beginning of the COVID pandemic and is largely attributed to a surge in imports ahead of anticipated tariffs. US GDP is expected to grow 2.4% in the second quarter, according to the Federal Reserve Bank of Atlanta.
Preliminary data for May from the University of Michigan showed consumer sentiment hit its second-lowest level on record. About two-thirds of consumers surveyed said they anticipate unemployment to rise over the next 12 months, the largest share since 2009.
"While tariffs on China have declined from 145% to 30%, the headwind to corporate earnings from tariffs remains significant because of the overall jump in the average tariff rate from 3% in January to 18% today," warned Apollo Global Management chief economist Torsten Sløk in a note. "We are already beginning to see weakness in the economic data with a significant decline in the earnings revisions ratio since Liberation Day." (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram and on LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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