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.

Containerboard
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. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
  6. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  9. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  10. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  4. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
  5. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  6. Net Present Value - NPV

    The difference between the present values of cash inflows and ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!