A New Trucking Index Suggests Rough Road Ahead

A new economic index that tracks tangible information -- U.S. trucking activity -- rather than intangibles such as consumer confidence isn't painting a pretty picture. The barometer, which uses diesel fuel sales as a proxy for goods being trucked throughout the country, fell at a 36.8% annual rate in January after a 60.8% increase in December. Its three-month moving average dropped to a 3.3% annual growth rate, down from 14.6% in December. The data suggest that nation's robust 5.7% fourth-quarter GDP growth rate may be difficult to sustain."Things are going to have to look a lot better in February and March to turn this worry into optimism about the power of the recovery," says Edward Leamer, director of the UCLA Anderson Forecast and chief economist for the Ceridian-UCLA Pulse of Commerce Index, as it's called.

Trucking is a useful indicator of the overall economy, representing nearly 69% of tonnage carried by all modes of domestic freight transportation, according to the American Trucking Association (ATA). Trucks hauled 10.2 billion tons of freight in 2008 and collected $660.3 billion, or 83.1%, of total revenue earned by all transport modes, the trade group says, citing the latest data available.

Tracking Diesel Purchases

The monthly index -- dubbed the PCI -- has an ungainly name, but it's based on an intriguing idea of measuring real-time diesel fuel data at 7,000 locations. It will be produced regularly by Ceridian, the UCLA Anderson School of Management and Charles River Associates.

Every time a diesel purchase is made using a Ceridian payment card, Ceridian's database notes the location and number of gallons pumped into the tank. The company processes millions of these fuel transactions each year. Analyzing the data gives an accurate picture of goods being trucked throughout the U.S. Creators of the PCI say it tracks the Federal Reserve's Industrial Production report and will be issued before the government data.

"Goods have to be transported for an economy to grow, so it will be important to monitor this index to see if the economy is really on the move," said Craig Manson, senior vice president and index expert for Ceridian, in a press release.

Measuring Something Tangible

PCI will likely gain popularity because it measures something tangible. Other economic measurements such as consumer confidence are far more ethereal. For instance, a consumer confidence index issued by ABC News had its lowest average reading ever in 2009.

Lately, though it has been creeping up, posting a slight gain for the week ended Feb. 8. Could it be because unemployment dipped below 10% in January? Then again, consumers should feel pessimistic. The housing market also remains troubled, posting a 57% increase in foreclosures in January.

These are mixed signals to say the least. Wall Street is forever arguing over whether consumers are "worried" or "anxious" or "confident."

The question of how much diesel fuel truckers are putting in their tanks may seem prosaic, but it offers the type of concrete data that will be welcome as policymakers try to bring the economy back on track following the worst economic slowdown since the Great Depression.
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