Sunday, March 1, 2009
Are VMT a predictor of a recession?
Last year when vehicle miles traveled (VMT) were plummeting, I suspected that the spike in gas prices was less of a driving force for declining VMT than rapidly shrinking housing activity. Part of my evidence for this was based on the uneven increase in transit use. If gas prices were shifting people away from driving but the demand for travel remained constant then most of the shift should be captured by transit. The rest of the shift would go towards car pools, walking, biking and telecommuting. But the case was that overall travel was declining, and I thought that this was a leading indicator of a weakening economy.
I never got around to making a chart showing this, so fortunately Calculated Risk has finally produced one. It's pretty clear that a rapid and large decline in VMT growth occurs right before a recession. Once VMT growth hits about one percent or less year over year, the economy goes bad. Obviously this is a simple apparent correlation and does not suggest causality. Since travel is largely a derived demand, economic performance is a major predictor of VMT. But in the future when we owonder hos the economy is doing we should look to VMT as a proxy measure of health. When VMT declines rapidly we should worry about the overall health of the economy rather than patting ourselves on the back for increased light rail transit boardings.
The chart is from calculated risk.