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Yahoo
6 hours ago
- Business
- Yahoo
July rail freight better but indicators cloud outlook
Intermodal and carloads showed improved resiliency in July in the face of increasingly concerning economic factors clouding the full-year outlook. The U.S. economy has shown resilience this year, with the GDP posting an encouraging 3% annualized growth in the second quarter, a marked improvement from the 0.5% contraction in Q1, said Rand Ghayad, chief economist for the Association of American Railroads, in a research note. This rebound, as per the Bureau of Economic Analysis, benefits significantly from a reduction in goods imports and a positive inventory adjustment. Yet, this is juxtaposed against a backdrop of stagnating consumer spending, a crucial engine for GDP growth, which accounts for about 70% of the total economic output. Consumer spending edged up by only 0.1% in June, marking its smallest year-over-year gain in 16 months, raising concerns about sustained economic momentum. In the labor market, July's job growth figures were disappointing, with only 73,000 new jobs added, far below the historical trend. Alarmingly, previous months saw significant downward revisions, amounting to a reduction of 258,000 jobs. Unemployment inched up to 4.2%, while the tally of discouraged workers – people who want a job but have stopped looking because they don't believe they'll succeed – soared to 6.2 million. Long-term unemployment is another troubling metric, having reached levels unseen since December 2021, which may damp consumer confidence and spending power, influencing rail volumes, especially those tied to consumer goods. Inflationary pressures, after cooling through the spring, have started to climb again. The Consumer Price Index saw a 2.7% year-over-year rise in June, its largest since February, casting uncertainty on consumer affordability and spending decisions. Inflation not only affects consumer expenditure but also challenges freight rail operators as operational costs rise, potentially affecting margins. The manufacturing sector continues to face headwinds, with the Institute for Supply Management's Manufacturing PMI dipping to 48% in July 2025, indicating contraction. With new orders lacking, the sector remains under pressure, feeding into lower demand for industrial rail freight. In contrast, the services sector, which wields considerable influence over economic health, hovered barely above contraction territory, recording a PMI of 50.1% in July. Should the services sector weaken further, it would adversely affect the broader economy, including rail freight. Freight rail market: Stability amid volatility Despite economic turbulence, the freight rail market has displayed remarkable resilience. U.S. rail intermodal shipments rebounded by 2.4% in July over the previous year. This recovery came on the heels of a decline in June and was driven by a rebound in business inventories and resurgent port activities. Total carloads were up 2.8%. The AAR Freight Rail Index, which tracks volumes excluding coal and grain, rose by 4% from June to July, marking its first increase in four months. This uptick is indicative of underlying demand staying robust. Carloads, excluding coal, surged by 4.7%, reflecting growth across 15 out of the 20 categories monitored by AAR. Particularly notable are gains in grain, coal, chemicals, and industrial products. Grain carloads rose by 13.5% in July, fueled by robust exports, which increased by 5.8% in the first half of the year, according to the U.S. Department of Agriculture, the most since 2022. Coal continued its recovery with a 4.5% increase in carloads on easier comparisons due to export disruptions from the Key Bridge collapse in Baltimore. Chemical shipments, following a brief decline, bounced back by 3.3% in July, maintaining their upward trajectory and posting the most-ever rail shipments. Industrial products, including autos and steel, showed significant growth, underscoring resilience in manufacturing despite broader sectoral weaknesses. 'Despite some signs of resilience, the economy is flashing warning signals,' Ghayad said. 'For freight railroads, rail volumes in recent months have remained relatively stable, but the near-term outlook remains challenging. The next few months will be critical in determining whether the economy regains its footing or slips further into stagnation.' Subscribe to FreightWaves' Rail e-newsletter and get the latest insights on rail freight right in your inbox. Find more articles by Stuart Chirls Pacific upping West Coast ports-to-Chicago intermodal stakes Grain, automotive keep U.S. rail traffic ahead of 2024 Planned US-Mexico rail route advances with environmental reportInfrastructure fund pays $1B to acquire largest US regional railroad The post July rail freight better but indicators cloud outlook appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
a day ago
- Business
- Wall Street Journal
The Agenda Behind the BLS Head's Firing
Commerce Secretary Howard Lutnick in February disbanded the Federal Economic Statistics Advisory Committee, a group that advised the government on producing accurate economic statistics. In an email announcing the decision, Mr. Lutnick explained that the committee's mission 'has been fulfilled.' At the same time, the Commerce Department disbanded another group concerned with the accuracy of economic releases by the government: the Bureau of Economic Analysis Advisory Committee. Mr. Lutnick's explanation for terminating the Federal Economic Statistics Advisory Committee made no sense. Input from disinterested experts drawn from across industry and academia is a good idea. But now it seems that Mr. Lutnick was taking marching orders to fulfill his boss's desire to control economic data. On Aug. 1 President Trump fired the head of the Bureau of Labor Statistics, the agency that releases the government's monthly employment report. The president claimed the most recent numbers were 'phony' and 'rigged' to make him and Republicans look bad.
Yahoo
3 days ago
- Business
- Yahoo
Feds say Nebraska GDP shrunk more than 6% in early 2025, led by ag
A farmer harvests a field of dry, edible beans in Nebraska's Panhandle. (Courtesy of Gary Stone) LINCOLN — Nebraska and Iowa tied for the states with the largest losses of Gross Domestic Product in the first quarter of 2025, of 6.1%, according to a report from the U.S. Bureau of Economic Analysis. Most remaining states also saw their GDP's shrink, though by smaller amounts, while a handful saw modest increases. Overall, the real GDP nationwide decreased 0.5%. GDP represents the total market value of goods and services produced during a specific time period. There are recent signs of a bounceback, however, as the BEA released a new report Wednesday sharing that the national GDP rose 3% during the second quarter. This primarily reflects a decrease in imports and an increase in consumer spending, per the report. State-level analysis has not been released yet. The first-quarter analysis compared Nebraska's GDP to what it was one year ago. The report revealed that declines in agriculture played the biggest role in Nebraska and Iowa's rates. This is a rare economic output decrease for the U.S. as a whole — the first decrease during the first quarter since 2022, according to Stateline reporter Tim Henderson. However, Nebraska State Budget Administrator Neil Sullivan said the drop is not as severe as it might appear. He said the percentage is based on projections from the last quarter of 2024. He offered competing numbers claiming Nebraska's actual GDP difference quarter-over-quarter was down about 1.5%. John Hansen, president of the Nebraska Farmers Union, said he believes the country is facing the worst farming financial crisis since the 1980s. He helps run a crisis hotline for farmers, and said he's fielded high-stress calls from people struggling financially. 'There's desperation in their voices,' Hansen said. 'They're up against the wall.' Global clashes and trade wars hammered Midwestern states' agricultural economies this year. Row-crop farmers took a hit, and that accounts for much of Nebraska's agricultural output, including wheat, corn and soybeans. Sullivan said prices for these products are the lowest in a decade. But on the flip side, he said the market is also stable, making it safer for farmers to produce. This is primarily because of protections added to the federal budget reconciliation bill, he said. Ernie Goss, a regional economist and professor at Creighton University, said prices for these top Nebraska products have gone down, while prices of farming resources like fertilizer have not. This has ripple effects, namely that farmers are pushed to cut costs and aren't spending as much on ag equipment, he said. On the bright side, livestock prices have remained good, Goss said, which is a relief to Nebraska's ranchers. He said many of these factors are impacting farmers across the U.S. — it's just felt deeper in Nebraska because the state is a top ag producer. 'It's like Michigan having a downturn in the automobile industry,' Goss said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX It's not just agriculture contributing to Nebraska's lower GDP, Goss noted. The state's manufacturing industry has also taken a hit, primarily due to job losses that have been prevalent across the country over the last year. Brad Lubben, associate professor of agricultural economics at University of Nebraska-Lincoln, said he expected record farm income in Nebraska for 2025, largely because of emergency government assistance that rolled out at the start of the year. However, he noted that uncertainty with federal policies on farming, taxes and trade can detract from production. 'Farm programs and tax policy have since been largely resolved with the recent reconciliation bill, although the impacts start to accrue in 2026,' Lubben said in an email. 'The trade outlook however remains quite uncertain and volatile, hurting prospects or at least sentiment looking forward.' Goss agreed that global trade has slowed. China, a top pork buyer, has slowed its trade with the U.S. due to tariffs, he said as an example. Goss said President Donald Trump seems to think of trade as 'a zero sum game,' though in reality he argued that both parties can benefit when it's done well. Midwest farm economies suffered while some Sun Belt states rolled in early 2025 Gov. Jim Pillen sang a different tune in a social media post on Monday, praising Trump for his recent trade deal with the European Union. Among other things, the deal imposes a 15% tariff on European goods in exchange for EU companies buying $750 billion in American energy products over three years. 'POTUS makes trade a priority — and agriculture keeps winning,' Pillen wrote in the post on X. A 6.1% GDP drop is cause for concern, Goss said. In a good year, he said Nebraska sees GDP growth of between 6-7%, adjusted for inflation. This level of decline could result in additional job losses and cuts to government services, he said. Sullivan said he does not foresee the need for cuts in Nebraska's budget due to the GDP drop. However, Lubben noted that with the state being a top ag producer and the continued strength in the cattle market, he still expects Nebraska to outperform the U.S. ag sector as a whole. Kenny Zoeller, director of policy research for Pillen's office, said Nebraska is in a strong fiscal position. Though he acknowledged Trump's tariffs contributed to the state's GDP drop, he said he expects that to improve over time. Hansen said it's too early to say what the impacts of Trump's tariffs will be. He was more confident in saying Nebraska consumers will pay higher prices because of them. Zoeller said Nebraska is in a similar position to 2017, when the state faced a more than $1 billion budget deficit and uncertainty in global trade. He argued that Nebraska has solid financial flexibility and decent reserves that should carry the state through safely. Editor's note: This story has been revised to include Wednesday's release of national GDP numbers for the second quarter. SUPPORT: YOU MAKE OUR WORK POSSIBLE Solve the daily Crossword
Kuwait Times
5 days ago
- Business
- Kuwait Times
US trade gap narrows 16% in June; deficit with China drops
US trade gap narrows 16% in June; deficit with China drops Canada's trade deficit widens to C$5.9 billion in June WASHINGTON/OTTAWA: The US trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years, the latest evidence of the imprint on global commerce President Donald Trump is making with sweeping tariffs on imported goods. The overall trade gap narrowed 16.0 percent in June to $60.2 billion, the Commerce Department's Bureau of Economic Analysis said on Tuesday. Days after reporting that the goods trade deficit tumbled 10.8 percent to its lowest since September 2023, the government said the full deficit including services also was its narrowest since then. Exports of goods and services totaled $277.3 billion, down from more than $278 billion in May, while total imports were $337.5 billion, down from $350.3 billion. The diminished trade deficit contributed heavily to the rebound in US gross domestic product during the second quarter, reported last week, reversing a drag in the first quarter when imports had surged as consumers and businesses front-loaded purchases to beat the imposition of Trump's tariffs. The economy in the second quarter expanded at a 3.0 percent annualized rate after contracting at a 0.5 percent rate in the first three months of the year, but the headline figure masked underlying indications that activity was weakening. A centerpiece of Tuesday's report was the latest steep drop in the US trade deficit with China, which tumbled by roughly a third to $9.5 billion in June to its narrowest since February 2004. Over five consecutive months of declines, it has narrowed by $22.2 billion - a 70 percent reduction. US and China trade negotiators met last week in Sweden in the latest round of engagement over the trade war that has intensified since Trump's return. The US currently imposes a 30 percent tariff on most Chinese imports, which has fueled a steep drop off in inbound goods traffic from China. Imports from China dropped to $18.9 billion, the lowest since 2009. The trade negotiators have recommended that Trump extend an August 12 deadline for the current tariff rate to expire and snap back to more than 100 percent, where it had briefly been earlier this year after a round of tit-for-tat increases by both sides. 'We're getting very close to a deal,' Trump said Tuesday in an interview on CNBC. 'We're getting along with China very well.' Canada's merchandise trade deficit widened in June to C$5.9 billion ($4.24 billion) as imports grew faster than exports due to a one-time high-value oil equipment import, data showed on Tuesday. The deficit observed in June is the second highest on record after the deficit dipped to its largest in history n April to C$7.6 billion. Analysts polled by Reuters had predicted the trade deficit to widen to C$6.3 billion in June from a downwardly revised C$5.5 billion in May. Total imports were up 1.4 percent in June to C$67.6 billion from a drop of 1.6 percent in the prior month, Statistics Canada said, adding that excluding the one-time product import which was from the US for an offshore oil project, total imports were down 1.9 percent in June. — Reuters
Time of India
6 days ago
- Business
- Time of India
US trade gap skids to 2-year low; tariffs exert pressure on service sector
The U.S. trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years, the latest evidence of the imprint on global commerce President Donald Trump is making with sweeping tariffs on imported goods. Trump's tariffs are leaving their mark on the U.S. economy beyond trade, as a measure of activity in the vast services sector hit stall-speed in July, with businesses saying the swarm of new import taxes is driving up costs and making business planning more difficult. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program The overall trade gap narrowed 16.0% in June to $60.2 billion, the Commerce Department 's Bureau of Economic Analysis said on Tuesday. Days after reporting that the goods trade deficit tumbled 10.8% to its lowest since September 2023, the government said the full deficit including services also was its narrowest since then. Exports of goods and services totaled $277.3 billion, down from more than $278 billion in May, while total imports were $337.5 billion, down from $350.3 billion. Imports of consumer goods and industrial supplies and materials were both the lowest since the middle of the COVID-19 pandemic, while exports of capital goods hit a record high. The diminished trade deficit contributed heavily to the rebound in U.S. gross domestic product during the second quarter, reported last week, reversing a drag in the first quarter when imports had surged as consumers and businesses front-loaded purchases to beat the imposition of Trump's tariffs. Live Events The economy in the second quarter expanded at a 3.0% annualized rate after contracting at a 0.5% rate in the first three months of the year, but the headline figure masked underlying indications that activity was weakening. Last week Trump, ahead of a self-imposed deadline of August 1, issued a barrage of notices informing scores of trading partners of higher import taxes set to be imposed on their goods exports to the U.S. With tariff rates ranging from 10% to 41% on imports to the U.S. set to kick in on August 7, the Budget Lab at Yale now estimates the average overall U.S. tariff rate has shot up to 18.3%, the highest since 1934, from between 2% and 3% before Trump returned to the White House in January. "Last week's trade announcement reduced policy uncertainty, but businesses hoping tariffs were just threats must now adjust to the reality they are here to stay," Nationwide Financial Markets Economist Oren Klachkin said in a note. "We think the negative impact of high tariff rates will outweigh any positives from lower policy uncertainty." CHINA TRADE GAP A centerpiece of Tuesday's report was the latest steep drop in the U.S. trade deficit with China, which tumbled by roughly a third to $9.5 billion in June to its narrowest since February 2004. Over five consecutive months of declines, it has narrowed by $22.2 billion - a 70% reduction. U.S. and China trade negotiators met last week in Sweden in the latest round of engagement over the trade war that has intensified since Trump's return. The U.S. currently imposes a 30% tariff on most Chinese imports, which have fueled a steep drop-off in inbound goods traffic from China. Imports from China dropped to $18.9 billion, the lowest since 2009. The trade negotiators have recommended that Trump extend an August 12 deadline for the current tariff rate to expire and snap back to more than 100%, where it had briefly been earlier this year after a round of tit-for-tat increases by both sides. "We're getting very close to a deal," Trump said Tuesday in an interview on CNBC . "We're getting along with China very well." The deficit with China was not the only one to narrow. Amid a continuing impasse on trade talks with Canada and hefty tariffs imposed on autos, steel and aluminum, the trade gap with the United States' northern neighbor was the smallest in nearly five years at $1.3 billion. The trade deficit with Germany also slid, coming in at $3.8 billion and the lowest in five years. But a pair of key Asian trading partners - Taiwan and Vietnam - both posted record surpluses. SERVICES SECTOR SOFTENING The tariff effects showed signs last month of spilling over into the domestic services sector, which accounts for roughly two-thirds of total U.S. economic activity. Business activity unexpectedly flatlined in July with little change in orders and a further weakening in employment even as input costs climbed by the most in nearly three years, underscoring the ongoing drag on businesses from tariff policy uncertainty. The Institute for Supply Management's nonmanufacturing purchasing managers index slipped to 50.1 last month from 50.8 in June. Economists polled by Reuters had forecast the services PMI would rise to 51.5. A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy. The survey's measure of services employment fell to 46.4, the lowest level since March, from 47.2 in June. It has indicated contraction in four of the last five months, and the reading followed the release last week of the Labor Department 's surprisingly soft U.S. employment report. Price pressures, meanwhile, continue to mount. The survey's prices paid index rose to 69.9, the highest level since October 2022, from 67.5 in June. Inflation until now has largely remained moderate because businesses have been selling merchandise accumulated before import duties came into effect, but data last week showed prices in some categories of goods like home furnishings and recreational gear have begun rising briskly. More benign inflation from the services sector has helped keep overall inflation in check, but the ISM data brings into question whether that trend will continue or further fan concerns about the emergence of stagflation. Respondents to the ISM survey frequently mentioned tariffs as a drag. "Trade uncertainty causing client reevaluation of feasibility for projects in certain sectors, resulting in some delays or cancellations," a respondent from the construction sector said.
