An Investment Opportunity for Railroads?

With the current dismal economic conditions of today--freightcars parked at every available storage space, it would seem like an unlikely time to suggest railroad investment...but maybe not. When listening to various prognostications, there seems to be two separate schools of thought. Some analysts peer into their crystal ball and see business slowly working its way back to normal. The other camp thinks that the world has been fundamentally changed since the economic meltdown. In this view, consumer spending and business in general, will never be the same. This latter school bases its thinking on consumer behavior. Evidence shows that the average Joe's savings rate has increased at the expense of his spending rate. Will he return to his earlier habits?

Here's the test: If average Joe starts doing well financially will he think about all those forgone purchases (his pent-up demand, as economists call it) and start a trend (as we see so often at the end of business cycles) to spend America out of recession?

Personally, my money is on Joe spending again. Maybe he'll ramp up slowly to his old ways, but old habits, especially ones related to consumption, die hard. With that in mind, the overall investment environment in general, and the railroad environment, in particular, will improve slowly over the next few months. There will be ups and downs, but the overall trend will be up.