Railroads signal a tepid US economic recovery

[Omaha Steve]

http://apnews.excite.com/article/20100121/D9DCEEJ00.html

Jan 21, 6:46 PM (ET)

By JOSH FUNK

OMAHA, Neb. (AP) - The nation's railroad operators expect a tepid recovery for the U.S. economy in 2010, as both businesses and consumers continue to wrestle with the effects of the recession.

The severe economic slump cut shipping demand for the railroads because American consumers and industries have been buying fewer of the cars, chemicals, crops, lumber and containers of imported goods the railroads carry.


In this April 22, 2008 file photo, a Union Pacific train travels through Council Bluffs, Iowa. Union Pacific Corp. said Thursday, Jan. 21, 2010, its fourth-quarter profit fell 17 percent as the railroad's efforts to improve productivity and limit costs could not offset lower shipping volume.(AP Photo/Nati Harnik, file)


Union Pacific Corp., Burlington Northern Santa Fe Corp. and CSX Corp. - the nation's top three railroad companies - all say demand for coal, once a lucrative segment, is slumping as U.S. factories and homeowners use less electricity. And as people continue to spend sparingly, shipments of consumer goods will show a slight increase at best.

The companies reported lower fourth-quarter profits this week and said results won't improve until they see a firm turnaround in the economy.

"Until employment shows some signs of improvement, you're going to have consumers stay on the sideline, and I think it's going to be pretty tough to see any kind of a strong recovery," Union Pacific Chairman and CEO Jim Young said in an interview with The Associated Press on Thursday.

Economists are forecasting U.S. gross domestic product to rise a little over 3 percent, modest growth for an economy coming out of recession.

FULL story at link.

[Brickbat]

1. Mr. Brickbat, who is on none of the named railroads in your OP,

had a two-month furlough in 2009, but has been working 60- to 80-hour weeks since then. Warren Buffett is betting hard on railroads, too.