(Advance Warning Signals) Gauging Economic Health Through Trucking Statistics
An interesting commercial index uses truck movement as an economic indicator.
The Ceridian-UCLA Pulse of Commerce Index (PCI) is based on real-time fuel consumption data for road trucking and serves as an indicator of the current state and possible future direction of the U.S. economy, says Professor Ed Leamer of UCLA who created the index by taking data from Ceridian‘s business of managing payment cards for trucking companies.
The PCI index monitors the truck movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers by tracking the volume and location of diesel fuel being purchased. Leamer says that the trucking activity is proportional to GDP in a normal economy. When the recession first started appearing on the horizon, the PCI fell significantly, giving an advance warning signal that the economy was going to sink.
Slate reports on the latest data from the PCI
So what is the PCI telling us now? The April report says the PCI fell 0.3 percent, although the measure was still 6.5 percent higher than it was in April 2009. Leamer, who believes that the U.S. economy is now in a self-sustaining recovery, notes that the PCI, which was strong in December, has slowed down somewhat. As a result, we should expect a weak industrial production number for April. “This is cause for concern but doesn’t completely dampen all the positive news we were reading about,” Leamer said.
Image by Eric E Johnson