Here's another early warning signal of possible recession: Fewer goods are being shipped across the country.

Truck, rail and air freight volumes fell 5.3% in June from the same period a year ago, the seventh straight annual decline, according to the closely watched Cass Freight Index. That followed a 6% drop in May.

The persistent drops could portend trouble for the economy because shipments reflect demand for a wide range of consumer and industrial goods.

“There is growing evidence from freight flows that the economy is beginning to contract,” Donald Broughton, managing partner of Broughton Capital and author of the Cass report, wrote in the latest edition last week.

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The index has tracked changes in the nation’s gross domestic product, the value of goods and services produced here, 80% of the time over the past 12 years, according to Natixis, a research firm. Broughton says the freight measure typically foreshadows a shift in the economy within six months.

“I think it’s a troubling signal,” says Joseph LaVorgna, chief economist of the Americas for Natixis.

Other analysts, however, are downplaying the pullback in shipping activity. Bill Cassidy, trucking specialist for the Journal of Commerce at IHS Markit, notes the Cass index is still at a historically high level.

Broughton largely blames the drop on the global economic slowdown and U.S. trade war with China, which have dampened U.S. imports and exports and led to fewer deliveries of chemicals, consumer products and other goods to seaports and airports. The trade fight also has crimped business confidence and investment, spurring fewer orders for computers, factory equipment and other long-lasting products.

Broughton also notes that so far this year, auto sales are down 1% while housing starts have fallen about 5%, translating into fewer deliveries of auto parts and lumber.

The freight skid has aided manufacturers and retailers but hurt shipping companies. Contract truck freight prices are down about 5% and spot prices have fallen about 30% this year, says Frank McGuigan, CEO of Transplace, a top freight management company.

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The latest monthly shipping data comes ahead of the Commerce Department’s second-quarter GDP report, slated to be released Friday. Economists estimate the economy grew at a 1.8% annual rate in the April-June period, down from a robust 3.1% pace in the first quarter growth as solid consumer spending offset sluggish business investment and exports. In the Cass report, however, Broughton raises the question of whether the GDP data will show that the economy actually shrank last quarter.

That would be worrisome but wouldn’t necessarily foreshadow a recession, which depends on a nuanced analysis of industrial production, employment, retail sales and personal income. Other indicators also have raised concerns about a possible downturn by next year. An inverted yield curve – with rates on three-month Treasury notes higher than 10-year Treasury yields – are underscoring a dim outlook. And second-quarter corporate earnings could reveal a second straight annual decline.

The Federal Reserve is expected to cut interest rates next week for the first time in a decade to head off a potential slide in the economy.

McGuigan of Transplace shrugged off worries that the shipping downdraft may be signaling recession. Last year, he says, was a “phenomenal” one for both the economy and freight companies, and 2019 simply represents a slowdown. The Cass index notched annual growth of more than 8.5% for much of 2018.

“You’re seeing a bit of a regression but we’re still in expansion mode,” he says.

Barclays economist Jonathan Millar agrees, adding that the economy last year was juiced by federal tax cuts and spending increases, as well as solid global growth. As a result, it matched its best performance since the Great Recession of 2007-09. While the U.S. economy has slowed, he says, it’s not contracting. Job growth and consumer spending, two chief economic pillars, remain solid.

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History may support that sanguine view. The Cass index similarly turned in yearly declines for 18 months in 2015 and 2016 without a recession materializing, notes economist Gregory Daco of Oxford Economics. The backdrop was somewhat similar to current conditions, with a sluggish global economy and strong dollar hurting U.S. exports, but a severe oil industry downturn also weighed on activity.

By contrast, Daco says, the Cass index fell more steeply – about 15% on average – before and during the Great Recession.

In an interview, however, Broughton who wrote the Cass report, notes the current freight downturn may be different than in 2015 and 2016. Then, he says, only certain rail shipments fell, because the pullback was chiefly tied to the oil crash and related orders for pipes and other equipment. This time, truck, rail and air freight are all sliding, ireflecting a broader slump, Broughton says.

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And while Broughton agrees that last year’s shipping volumes were unusually strong, he says activity in recent months has weakened more sharply. In June, for example, shipments were just 1.5% higher than even 2017 volumes, he says. If the trend continues, freight volumes will be lower in the second half of the year than they were two years earlier.