Federal Reserve Bank on the current recovery…the good and the bad.

Last week I attended an SIOR event that featured a speaker from Federal Reserve Bank of Chicago, here are my notes.

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Recovery from 2009 has not been as strong as past recessions. Why?
1. Hesitant growth since 2009
2. Spike in financial stress. Tight lending principals. Now stress is low.
Solutions:
1. Fed has kept Fed Fund target rate close to zero. Fed raised rate 50 basis points in Dec 2015
2. Quantitative easing. Buying securities, fed holds over $4T.
Impacts:
1. Food below inflation
2. Energy (oil) price are low.
3. Long term unemployed (more than 6 months) is at its highest historical level, but it is going down. One example would be people who want to work full time only working part time.
4. Labor force participation is low, but getting better. One reason may be wages have not increased.
5. Broad based recovery. Auto and auto parts/components. Fed sees a 2.4% manufacturing increase in 2017.
6. Dollar has been increasing. Good for US consumer detrimental for exports/manufacturing.
Next:
1. Inflation is beginning to increase +\-2%.
2. Employment has been steady, but not growing too much.
3. IL. Unemployment is creeping up (bad).
4. Housing starts are increasing steadily over 1M per year.
5. Interest rates are staying low.

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Big delays due to I-55 construction @ Arsenal Road, to be completed by Labor Day.

Experienced a significant traffic back-up approaching Arsenal Rd on I-55 in Joliet.  Work on the bridge spanning the Des Plaines River has traffic down to one lane (!!!!) in both directions, see pictures in this post.

Received this update from IDOT:

The work being performed to the structures carrying I-55 over the Des Plaines River in Will County includes repairing the structural steel, patching and resurfacing the bridge decks and cleaning and painting the structures. In 2013 work was done on the southbound structures. This year (2014) work is being performed on the northbound structures. The work is expected to be completed by late August (before the Labor Day holiday). The Illinois Department of Transportation appreciates your patience as we work to repair these 60+ year old structures.

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Alternative Fuels…OMG its LNG and CNG

Alternative Fuels 227 x 190Enjoyed Jared Stedl’s comments  at the Intermodal Association of Chicago dinner on March 4, 2013.

What I learned:

1.  Cost

  • Compressed Natural Gas (CNG) is 40% cheaper than diesel.  $4.15/gallon for diesel vs $2.25/gallon for CNG or Liquified Natural Gas (LNG).
  • CNG engines can be cost more than $35,000 more than a diesel engine.
  • 18 month – 3 year payback to switch from CNG from Diesel.

2.  Fleets

  • 20% of all US buses use LNG or CNG
  • 50% of all waste hauler orders from the factory are CNG

3.  Environmental Impact

  • NG reduces up to 30% of the CHG and 85% of the particulate matter…this is good

4.  Challenges

  • Still to early for to provide definitive cost benefit analysis.
  • NG vehicles require more maintenance.
  • Limited locations to get the fuel, typically customized for the user on their site.