The current gloomy outlook on the economy and a belief in the upcoming double dip recession is fast becoming a consensus view among investors. However, there have been some signs of strong activity across the U.S. economy. Although these reports may not be comprehensive enough to make a case that the economy is fine, they bear mentioning, if only to counteract the negative psychology in the market.
IN PICTURES: How To Make Your First $1 Million

Railroad Traffic
The Association of American Railroads has reported that rail traffic carloads in the U.S. were up by 18.8% for the week ending July 3, 2010, over the same week in 2009. The number of carloads, at 286,777 was also up by 0.4% over the comparable week in 2008.

Intermodal traffic also moved higher, and was up by 36.6% and 19.1% over 2009 and 2008, respectively. Rail carloads for the first six months of the year are now up by 7.8% over the comparable period in 2009.

The 2009 number was a fairly easy comparison since traffic was so weak at that time, but investors should take some comfort that rail traffic is above the 2008 level.

Obviously these reports are positive for the railroad companies, including Norfolk Southern (NYSE:NSC) and Union Pacific (NYSE:UNP). CSX Corp (NYSE:CSX) reports its earnings on July 13, 2010, and analysts will be sure to question management about any signs of weakening demand.

Several paper and packaging companies have pushed through price increases recently on containerboard and other products. Many investors look at sales and other fundamental data about containerboard as an important read into the strength of the economy since the product is tied directly to the shipments of goods.

RockTenn (NYSE:RKT) recently increased prices for containerboard by $60 per ton. Following the lead of Georgia-Pacific Corp., a private company and large producer.

RockTenn also instituted a $40 per ton price increase effective at the beginning of August on several brands of coated recycled paperboard products. Coated recycled paperboard is used for food and non-food packaging.

These price increases may not stick completely, as customers can shop around for lower prices. Other large containerboard players like International Paper (NYSE:IP) and Packaging Corp. of America (NYSE:PKG) have not yet publicly matched these price increases. However, if the industry were seeing weakness then it wouldn't make sense to be so aggressive on pricing in the face of falling demand. Another possibility is that the price increases are more due to the strong fundamentals in the product, as inventories at the lowest levels in years.

Bottom Line
The current outlook for economic growth among investors is pessimistic, but there still are some positive signs on the economic front. These should be noted and incorporated into the market's view on the economy.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  4. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  5. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  6. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  7. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  8. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  9. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  10. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  4. Do interest rates increase during a recession?

    Interest rates rarely increase during a recession. Actually, the opposite tends to happen; as the economy contracts, interest ... Read Full Answer >>
  5. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  6. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>

You May Also Like

Trading Center