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Vehicle Miles Driven: The Recovery Shifts Into Reverse

Courtesy of Doug Short.

The Department of Transportation’s Federal Highway Commission has released the latest report on Traffic Volume Trends, data through April. Travel on all roads and streets declined by 0.4% (-1.0 billion vehicle miles) for April 2012 as compared with April 2011. The 12-month moving average of miles driven declined by 0.7% from April a year ago. The latest report documents the first month-over-month decrease after four consecutive monthly increases (PDF report).

Here is a chart that illustrates this data series from its inception in 1970. I’m plotting the “Moving 12-Month Total on ALL Roads,” as the DOT terms it. See Figure 1 in the PDF report, which charts the data from 1987. My start date is 1971 because I’m incorporating all the available data from the DOT spreadsheets.


 

 

The rolling 12-month miles driven contracted from its all-time high for 39 months during the stagflation of the late 1970s to early 1980s, a double-dip recession era. The most recent dip has lasted for 50 months and counting — a new record, but the trough to date was in November 2011.

The Population-Adjusted Reality

Total Miles Driven, however, is one of those metrics that must be adjusted for population growth to provide the most revealing analysis, especially if we’re trying to understand the historical context. We can do a quick adjustment of the data using an appropriate population group as the deflator. I use the Bureau of Labor Statistics’ Civilian Noninstitutional Population Age 16 and Over (FRED series CNP16OV). The next chart incorporates that adjustment with the growth shown on the vertical axis as the percent change from 1971.

 

 

Clearly, when we adjust for population growth, the Miles-Driven metric takes on a much darker look. The nominal 39-month dip that began in May 1979 grows to 61 months, slightly more than five years. The trough was a 6% decline from the previous peak.

The population-adjusted all-time high dates from June 2005. That’s 82 months ago — closing in on seven years. The latest data, for April 2012, is 8.41% below the 2005 peak. This is a new interim low after two months of increasing miles driven. Our adjusted miles driven based on the age 16-and-older cohort is about where we were as a nation in May 1995.

About that Population Adjustment…

I’m frequently asked why I use the CNP16OV data for the population adjustment, often with the suggestion that it would make more sense to limit the population to licensed drivers. For openers, I don’t know of a valid source for the driver-licensed population. Moreover, the correlation between license holders and actual drivers is not a reliable one. Many license holders in households do not drive, especially in their older years. According to Census Bureau data on gasoline sales (courtesy of Harry Dent’s research on demand curves), dollars spent on gasoline peaks for people in their late 40s and falls off rather quickly after that.

In fact, I think there’s a good case for using the Census Bureau’s mid-month estimates of total population (POPTHM) rather than civilians age 16 and over for the population adjustment. The reason is that a portion of total miles driven is specifically to support children’s needs (day care, schools, children’s activities, etc.) and the needs of elders who might have licenses but no longer drive. Ultimately the division of miles driven by either population group (CNP16OV or POPTHM), while not a perfect match with drivers, is a consistent and relevant metric for evaluating economic growth.

In closing, here is the same population-adjusted chart, this time with the total population for the adjustment. In the total-population adjusted version the trough for the current decline also dates from November 2011 at -7.30% versus the latest -7.21%. It thus fractionally off the trough after five months of increased miles. However the April decline erases almost half of the increase since the November trough.

 

 

The price of regular gasoline hit an interim high in the Energy Information Administration (EIA) report issued on April 2nd. It fell 11 cents by the end of the month and has continued to fall as I type this in late June. Despite the April price decreases, miles driven contracted. But with the significant decline during May and June, we might reasonably expect to the miles driven numbers begin to increase more substantially if the economy is indeed on the mend.

 

 

 

 


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Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

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Vehicle Miles Driven: The Recovery Shifts Into Reverse

Courtesy of Doug Short.

The Department of Transportation’s Federal Highway Commission has released the latest report on Traffic Volume Trends, data through April. Travel on all roads and streets declined by 0.4% (-1.0 billion vehicle miles) for April 2012 as compared with April 2011. The 12-month moving average of miles driven declined by 0.7% from April a year ago. The latest report documents the first month-over-month decrease after four consecutive monthly increases (PDF report).

Here is a chart that illustrates this data series from its inception in 1970. I’m plotting the “Moving 12-Month Total on ALL Roads,” as the DOT terms it. See Figure 1 in the PDF report, which charts the data from 1987. My start date is 1971 because I’m incorporating all the available data from the DOT spreadsheets.


 

 

The rolling 12-month miles driven contracted from its all-time high for 39 months during the stagflation of the late 1970s to early 1980s, a double-dip recession era. The most recent dip has lasted for 50 months and counting — a new record, but the trough to date was in November 2011.

The Population-Adjusted Reality

Total Miles Driven, however, is one of those metrics that must be adjusted for population growth to provide the most revealing analysis, especially if we’re trying to understand the historical context. We can do a quick adjustment of the data using an appropriate population group as the deflator. I use the Bureau of Labor Statistics’ Civilian Noninstitutional Population Age 16 and Over (FRED series CNP16OV). The next chart incorporates that adjustment with the growth shown on the vertical axis as the percent change from 1971.

 

 

Clearly, when we adjust for population growth, the Miles-Driven metric takes on a much darker look. The nominal 39-month dip that began in May 1979 grows to 61 months, slightly more than five years. The trough was a 6% decline from the previous peak.

The population-adjusted all-time high dates from June 2005. That’s 82 months ago — closing in on seven years. The latest data, for April 2012, is 8.41% below the 2005 peak. This is a new interim low after two months of increasing miles driven. Our adjusted miles driven based on the age 16-and-older cohort is about where we were as a nation in May 1995.

About that Population Adjustment…

I’m frequently asked why I use the CNP16OV data for the population adjustment, often with the suggestion that it would make more sense to limit the population to licensed drivers. For openers, I don’t know of a valid source for the driver-licensed population. Moreover, the correlation between license holders and actual drivers is not a reliable one. Many license holders in households do not drive, especially in their older years. According to Census Bureau data on gasoline sales (courtesy of Harry Dent’s research on demand curves), dollars spent on gasoline peaks for people in their late 40s and falls off rather quickly after that.

In fact, I think there’s a good case for using the Census Bureau’s mid-month estimates of total population (POPTHM) rather than civilians age 16 and over for the population adjustment. The reason is that a portion of total miles driven is specifically to support children’s needs (day care, schools, children’s activities, etc.) and the needs of elders who might have licenses but no longer drive. Ultimately the division of miles driven by either population group (CNP16OV or POPTHM), while not a perfect match with drivers, is a consistent and relevant metric for evaluating economic growth.

In closing, here is the same population-adjusted chart, this time with the total population for the adjustment. In the total-population adjusted version the trough for the current decline also dates from November 2011 at -7.30% versus the latest -7.21%. It thus fractionally off the trough after five months of increased miles. However the April decline erases almost half of the increase since the November trough.

 

 

The price of regular gasoline hit an interim high in the Energy Information Administration (EIA) report issued on April 2nd. It fell 11 cents by the end of the month and has continued to fall as I type this in late June. Despite the April price decreases, miles driven contracted. But with the significant decline during May and June, we might reasonably expect to the miles driven numbers begin to increase more substantially if the economy is indeed on the mend.

 

 

 

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a free SWW trial or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Dashboard

 Sector Performances (Today)

 Thermal Imaging