Trucking Downtick Points to Slightly Slower Economy

Two indirect barometers for the U.S. economy were released on Tuesday, both of which are transportation related, and one of which is of special interest to industrial and retail real estate.

Two indirect barometers for the U.S. economy were released on Tuesday, both of which are transportation related, and one of which is of special interest to industrial and retail real estate. That one is the American Trucking Associations’ For-Hire Truck Tonnage Index, which gauges how much business truckers are doing. Since it’s the trucking industry’s main job to take goods from point A to point B, and usually those points involve some kind of warehouse or distribution space, the import of the index for industrial space owners is fairly clear. The news wasn’t particularly good: the index dropped 3.1 percent in February, following a gain of 1.3 percent during the previous month. In February, the index came in at 131.6 (2000 = 100), its lowest level since September 2014.

ATA Chief Economist Bob Costello was sanguine about the numbers, however, noting in a statement that retail sales, manufacturing output and housing starts were all off during the month, so the tonnage decline fits with those indicators. He added that the winter weather that vexed a large portion of the country during February had a negative impact on truck tonnage, as well as industries that drive tonnage, like retail, manufacturing and housing starts. So maybe the numbers are a temporary blip. As retail sales and manufacturing output improve, that ought to be reflected in higher tonnage totals.

The other transportation-related economic indicator released on Tuesday was total miles driven, which is calculated by the U.S. Department of Transportation. Travel on all roads and streets was up by 4.9 percent (11.1 billion vehicle miles) for January 2015 as compared with the same month a year ago. The total, which is a 12-month trailing figure, has finally recovered from the recession, in the sense that it’s surpassed the pre-recession peak before the spike in gas prices in 2008. But for the last six years or so, miles driven has been mostly flat from year to year.

In previous decades, the growth of total miles driven was a decent mirror to economic growth as a whole. On the whole, mileage increased fairly steadily in the years after World War II but before the late 2000s recession. The more recent stagnation happened despite the fact that the population is still increasing. People aren’t driving quite as much as they used to. That’s partly a function of stagnant wages, but also of previously higher gas prices, and of an aging population, since older people drive less as a demographic group. Low gas prices might spur further increases in the short term, but those would probably prove short-lived if gas prices spike upward again.