MAY-JUN 2018

Crossties is published for users and producers of treated wood crossties.

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CONTACT RTA WEBSITE BECOME A MEMBER BECOME A MEMBER RTA WEBSITE CONTACT Cahaba Pressure Treated Forest Products Eagle Metal Products East Coast Railroad Gross & Janes Co. Hurdle Machine Works Koppers Inc. CROSSTIES • MAY/JUNE 2018 10 MARKET UPDATE In addition, personal income is increasing. There are expectations that the FED will make two or three further rate hikes this year. Also, GDP should rise above 3 percent in the second and third quarters. Besides the tensions in trade relations, there is almost nothing not to like in the overall economy. This growth should also increase railroad freight traffic. Still, there are some headwinds coming. Even though annual GDP growth above 3 percent on a sustainable basis is desirable, some evidence may not support this. On the supply side, U.S. GDP depends on, among other things, population growth. Between 1960 and 2000, the annual population growth was relatively strong at 1.1 percent on average. For the same time frame, GDP grew 3.6 percent on average. However, in the last 17 years, population growth slowed to an average rate of 0.8 percent. Similarly, economic growth slowed to 1.8 percent on average. In addition, the labor force participation rate declined measurably (Figure 1). This is not just the case in the United States. Other nations, like Japan, are experiencing similar declines in population growth and GDP growth. The decline in labor participation has been partially substituted by labor productivity. The long-term average of productivity growth in the U.S.A. is 2.2 percent. Yet, since 2007, the average has been only 1.0 percent (BLS), thus not contributing to GDP growth as in the past. How is the demand side of GDP? Disposable personal income has grown 17 percent in the last 10 years. Of late, the growth in personal income has not been evenly distributed among households, and wages have been relatively stagnant when adjusted for inflation. A study by the New York FED shows that on average, 60 percent of households had anemic growth in their real disposable income (Table 1). It is generally agreed that consumer spending accounts for about 70 percent of the GDP in the United States. Higher Will Annual GDP Growth Break The 3% Mark? Look To The Consumer For Guidance By Petr Ledvina Photo: Federal Reserve Federal Reserve Chairman Jeremy Powell said at a news conference in June that the Fed would raise its benchmark interest rate by a quarter of a percentage point, the second hike this year. The Fed reported that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Recent data suggest that business fixed investment has continued to grow strongly. Besides the tensions in trade relations, there is almost nothing not to like in the overall economy. This growth should also increase railroad freight traffic. " " For the first quarter of this year, the U.S. economy had solid GDP growth, and headline unemployment was the lowest in many years. Commodities prices have recovered, and inflation is rising to the 2 percent target .

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