Is Waste Carload Growth Diverging With GDP Signaling Economic Weakness Ahead? (AAR Chart)

Is the divergence between AAR Waste Carload growth and U.S. GDP growth year-over-year signaling economic weakness ahead? It looks like waste carloads decreased more than 20% y/y during Q3 (quarter-to-date average). The year-over-year change is similar to the 2008 decline before GDP crashed. Waste carloads declined more than 40% y/y at the low. Maybe this time is different. Green movement? This chart was posted on TwitPic by Michael McDonough of Bloomberg Brief (hat tip). He actually created an infographic on on June 9, 2010 that confirmed the economic recovery: "Waste on Freight Cars Gains Most Since '94 Confirming Recovery." Also, this may be of interest "Chemical Activity Barometer Has Been Falling Since April, Leads NBER By 8 Months On Average" (June 26, 2012). However, the weakness in waste carloads could also be related to China's slowdown, since trash was the U.S.'s biggest export to China between 2000-2008.

From U.S. News on March 3, 2010:

"According to data provided by the U.S. International Trade Commission, Chinese imports of U.S. cast-offs (scrap metal, waste paper, and the like) surged by an eye-popping 916 percent over the 2000-2008 period, with most of that expansion occurring after 2004."

But, the Bloomberg infographic showed that trash carloads had the highest correlation to GDP growth:

"from early 2001 through the first quarter of this year, the growth rate of carloads of waste has shown a statistical correlation of 82.4 percent with the year-on-year change in gross domestic product, according to Bloomberg calculation."

Source: TwitPic,

Related: Waste and Scrap Carloads Correlate With Economic Growth (GDP), Weekly Chart Update (Feb 2011)
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