Cass Freight Index Down 9th Month "Signaling Economic Contraction”

Year-over-year freight volume is down nine consecutive months starting December of 2018.

The Cass Freight Index report cites "More Signs of Contraction".

  • When the December 2018 Cass Shipments Index was negative for the first time in 24 months, we dismissed the decline as reflective of a tough comparison. In January and February 2019, we again made rationalizations. When March was also negative (-1.0%), we warned that we were preparing to “change tack” in our outlook; when April was down (-3.2%), we said, “we see material and growing downside risk to the economic outlook.”
  • With the -3.0% drop in August, following the -5.9% drop in July, -5.3% drop in June, and the -6.0% drop in May, we repeat our message from last three months: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”
  • We acknowledge that: all of these negative percentages are against extremely tough comparisons, and the Cass Shipments Index has gone negative before without being followed by a negative GDP. However, weakness in demand is being seen across most modes of transportation, both domestically and internationally, with many experiencing increases in the rates of decline.
  • We know that freight flows are a leading indicator, so by definition there is a lag between what they are predicting and when the outcome is reported. Nevertheless, we see a growing risk that GDP will go negative by year’s end.
  • The weakness in spot market pricing for many transportation services, especially trucking, is consistent with the negative Cass Shipments Index and, along with airfreight and railroad volume data, strengthens our concerns about the economy and the risk of ongoing trade policy disputes. Weakness in commodity prices and the ongoing decline in interest rates have all joined the chorus of signals calling for an economic contraction.

Cass asks "When Will the GDP Turn Negative?"

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