Transcript P3.3

Should the Transportation Output Be
Included as Part of Coincident
Indicators System?
Dr. Kajal Lahiri
University at Albany-SUNY
For presentation at
Third International Seminar on
Early Warning and Business Cycle Indicators
November 17 to 19, 2010
Moscow, Russian Federation
Transportation and the Modern Economy
History Review
• U.S. DOC (1923), Dixon
(1924)
-- 1st President’s Conference on
Unemployment in 1921.
• Early NBER studies
The Honorable Norman Mineta, Secretary
of the U.S. Department of Transportation,
visits the NYSE to announce a new
economic indicator, the Transportation
Services Index (TSI), and rings The
Opening Bell (1/29/2004).
-- Burns and Mitchell (1946)
and Hultgren (1948); Moore
(1961), Babson’s reports.
• Transportation Services
Index (TSI)
2
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Economic Trends
By James Mehring
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Trains, Planes, And Growth
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Story
A transportation index tracks
business activity
Economists, investors, and
policymakers are always
looking for better ways to
gauge current and future
economic activity. Now the
government is offering a brand-new tool.
Trains, Planes, And
Growth
Do Drugs Make A
Dent?
A Gap In The Savings
Rate
On Mar. 10 the Transportation Dept. released the first
report of its Transportation Services Index (TSI), a
monthly measure that follows freight and passenger movements. Made up of
eight components ranging from trucking tonnage to mass-transit ridership to
petroleum pipeline transport, the December reading rose 1%, to a high of 118.5.
That gain is a good sign for the economy, according to the index' creator, Kajal
Lahiri, an economics professor at the State University of New York at Albany.
3
Wall Street Journal Front Page (March 15, 2010)
4
Our publications so far:
• 1).“Monthly Output Index for the U.S. Transportation Sector”, (with H.
Stekler, P. Young and W.Yao), Journal of Transportation and Statistics,
Vol. 6 (2/3), 2003, 1-41.
•
2). “The Predictive Power of an Experimental Transportation Output
Index,” (with W. Yao), Applied Economic Letters, Vol. 11, 3, 2004, 149152.
•
3).“Transportation Sector and the Aggregate Economy: Their Linkages
at the Business Cycle Frequencies”, (with W.Yao), Transportation
Research Record, National Academies, 103-111, 2004.
•
4).“A Dynamic Factor Model of the Coincident Indicators for the U.S.
Transportation Sector,” Applied Economics Letters, (with W.Yao), 11,
595-600, 2004.
•
5).“Economic Indicators for the U.S. Transportation Sector” (with
W.Yao), Transportation Research – A, 40, 2006, 872-887.
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TSI: Constituents
• Consistent with National Income and Product Account (NIPA)
Satellite Model (For-Hire Transportation)
Source: North America Industry Classification System (NAICS, 1997)
•
•
•
•
•
•
(481) Air Transportation
(482) Rail Transportation
(483) Water Transportation
(484) Truck Transportation
(485) Transit and Ground Passenger Transportation
(486) Pipeline Transportation
• Others
– (487) Scenic and Sightseeing Transportation
– (488) Support Activities for Transportation
– (491) Postal Service
– (492) Couriers and Messengers
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TSI: Data Documentation
Subsectors
Total
Data Series
Transportation Services Output
Airlines
Freight
Passenger
Movement
Travel
Freight
Passenger
Rail
Freight
Passenger
Original
Data Source
Air RTM
U.S. BTS
Air RPM
U.S. BTS
Monthly Railroads Traffic
AAR
Rail RPM
U.S. FRA
Trucking
Freight
Tonnage Index
ATA
Waterway
Freight
Commerce Tonnage
U.S. Army
Indicator
Corps
Energy Movements Index
U.S. EIA
Ridership
APTA
Pipelines
Transit
Freight
Passenger
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TSI: Index Construction
Chained Fisher-ideal index: annually weighted
I
I
I P
I P
A
m
A

m
y ( m 6 )
m 1
m 1
Im 
A
I
I
A
m
A
m 1

I
I
y ( m 6 )
A
m 1
A
m2

I P
*
I P
m
y ( m6)
m 1
,
y ( m6)
A
  I 1A 100
I
0
8
Annual Weight of Each Transportation Mode
.50
.50
.45
.45
.40
.40
.35
.35
.30
.30
.25
.25
.20
.20
.15
.15
.10
.10
.05
.05
.00
.00
78
80
82
84
Waterway
Trucking
86
88
90
Transit
Rail Passenger
92
94
96
Rail Freight
Pipelines
98
00
02
Air Passenger
Air Freight
9
Transportation Services Index (Total) and U.S. Economic Cycles
130
130
Nov-99
120
110
Dec-03
120
Jul-03
110
Dec-94
Sep-01
100
100
Jan-96
90
90
Feb-88
Aug-90
Mar-79
80
80
Jul-89
70
Sep-84
70
Dec-80
Sep-85
Nov-82
60
60
80
82
84
86
88
90
Total Index
92
94
96
98
00
02
Smoothed
Note: Dark shaded areas represent the NBER-defined recessions for the U.S.
economy; lightly shaded areas represent growth slowdowns for the U.S. economy.
10
Cyclical Movements in TSI (Total) and U.S. Economics Cycles
12
12
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
-12
-12
80
82
84
86
88
90
92
94
96
98
00
02
Cyclical Movements in Total Index
Cyclical movements are obtained as deviation from Hodrick-Prescott (JME, 1997) trend of TSI.
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Transportation Services Index
(From U.S. DOT RITA website)
12
Transportation Services Index (Freight) and U.S. Economic Cycles
130
130
Dec-03
Nov-99
120
120
110
Dec-01
100
110
100
90
90
80
80
70
70
60
60
50
50
80
82
84
86
88
90
Freight Index
92
94
Smoothed
96
98
00
02
13
Transportation Services Index (Passenger) and U.S. Economic Cycles
130
130
Nov-00
120
110
120
Dec-03
Jan-03
110
100
100
90
90
Sep-01
80
80
70
70
60
60
50
50
80
82
84
86
88
90
Passenger Index
92
94
96
Smoothed
98
00
02
14
Spider Chart During Recession of 1973:11 to 1975:3
1.04
1.04
1.00
1.00
0.96
0.96
0.92
0.92
0.88
0.88
0.84
0.84
0.80
0.80
0.76
0.76
0.72
0.72
0.68
0.68
1973:3
IP
1973:11
EMP
1975:3
Sales
INC
Trucking
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Spider Chart During Recession of 1980:1 to 1980:7
1.16
1.16
1.12
1.12
1.08
1.08
1.04
1.04
1.00
1.00
0.96
0.96
0.92
0.92
0.88
0.88
1979:3
IP
1980:1
EMP
Sales
1980:7
INC
TSI
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Spider Chart DuringRecession of 1981:7 to 1982:11
1.06
1.06
1.04
1.04
1.02
1.02
1.00
1.00
0.98
0.98
0.96
0.96
0.94
0.94
0.92
0.92
0.90
0.90
0.88
0.88
1980:7 1980:12
IP
1982:11
1981:7
EMP
Sales
INC
TSI
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Spider Chart During Slowdown of 1984:9 to 1987:1
1.14
1.14
1.12
1.12
1.10
1.10
1.08
1.08
1.06
1.06
1.04
1.04
1.02
1.02
1.00
1.00
0.98
0.98
0.96
0.96
0.94
0.94
1984:9
IP
1985:12
EMP
Sales
1987:1
INC
TSI
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1.03
Spider Chart: Recession of 1990:7 to 1991:3
1.03
1.02
1.02
1.01
1.01
1.00
1.00
0.99
0.99
0.98
0.98
0.97
0.97
0.96
0.96
0.95
0.95
0.94
0.94
0.93
Feb-88
Jan-89
IP
Aug-89
EMP
Jul-90
Sales
INC
Mar-91
0.93
Dec-91
TSI (Total)
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1.06
Spider Chart: Slowdown of 1995:1 to 1996:1
1.06
1.04
1.04
1.02
1.02
1.00
1.00
0.98
0.98
0.96
0.96
0.94
0.94
0.92
0.92
0.90
0.90
0.88
0.88
0.86
0.86
0.84
0.84
Jan-95
IP
EMP
Sales
Jan-96
INC
TSI (Total)
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1.06
Spider Chart: Recession of 2001:3 to 2001:11
1.06
1.04
1.04
1.02
1.02
1.00
1.00
0.98
0.98
0.96
0.96
0.94
0.94
0.92
0.92
Nov-00
0.90
Nov-99 Jun-00
IP
Mar-01
EMP
Dec-02
Nov-01
Sales
INC
TSI (Total)
0.90
Dec-03
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Summary
NBER
Chronologies of Economy
Recessions
Lead and Lag of
Transportation Vs.
Growth Cycle
Business Cycle
Chronology of TSI
Recessions
of Economy
Growth Cycle
of Economy
P
T
P
T
P
T
P
T
P
T
-
Jul-80
-
Jul-80
-
Jul-80
-
0
-
0
Jul-81
Nov-82
Jul-81
Dec-82
Feb-81
Oct-82
-5
0
-5
-2
-
-
Sep-84
Jan-87
Aug-84
Sep-85
-
-
-1
-16
Jul-90
Mar-91
Jan-89
Dec-91
Feb-88
Mar-91
-29
0
-11
-9
-
-
Jan-95
Jan-96
Dec-94
Jul-95
-
-
-1
-6
Mar-01
Nov-01
Jun-00
-
Nov-99
Sep-01
-16
-2
-7
-
Mean
-17
-0.5
-5
-7
Median
-16
0
-5
-6
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Conclusions
TSI is roughly coincident with the onset of growth slowdowns, and
recoveries from recessions .
TSI outperforms other coincident indicators in dating troughs of
U.S. business cycles.
TSI, although giving early signals to the start of recession, is still
very useful in dating peaks when combined with one of the two
broad measures (EMP or INC).
TSI (Total and Freight) leads the onset of recessions and
recoveries from growth slowdowns with consistent regularity.
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