By Tom Williams
In a robust economy in America, people tend to be on the move – whether going to work, out shopping, or out doing leisure activities. One key measurement to track this is Vehicle Miles Traveled (VMT). There tends to be a strong correlation between economic growth (especially Mainstreet) and VMT.
The VMT is just one measure to track the economic growth story, but there are others using Mainstreet data. For example, jobs and tracking poverty to name a few. Using Mainstreet data as opposed to mere financial data (such as GDP reports) can better illustrate the state of the economy with actual people living on Mainstreet.
The Federal Reserve tracks VMT. The 12-month moving VMT series is created by appending the recent monthly figures from the FHA’s traffic volume trends to their VMT data series – see here the data source and in the summary chart below.
Drilling down on a specific state, California, we can see in the chart below (black and dark blue lines) that the VMT series for California for the year 2021-2022 (up to March 22, 2022) is significantly lower than the pre-Covid years of 2018-2019.
The VMT measure clearly shows that the economy has yet to recover to pre-Covid times – despite the Biden administration touting his economic successes, after two years from the start of the Covid “pandemic.” Remember, most of the Covid restrictions have been removed. So why has VMT not fully recovered back to its trendline?
One understands that during the height of the Covid “pandemic,” due to lockdowns, VMT plummeted. Many might say that Covid taught people and businesses to learn to have staff work from home – it merely continued after the “pandemic.” Hence, a new normal of a lower trend line of VMT.
Is this assumption true? Work travel is only 15 percent of the total VMT. See the following from the Bureau of Transportation shown below, and learn more here.
- 45 percent of daily trips are taken for shopping and errands.
- 27 percent of daily trips are social and recreational, such as visiting a friend.
- 15 percent of daily trips are taken for [work] commuting.
This can be further exemplified in the share of Americans working from home historically. This has largely returned to normal from pre-Covid. See this in the chart below and learn more here.
Re-looking at the above charts, what do these VMT numbers say about the American economy today.
- The Obama years after 2008 were rather flat. In the Trump administration years (2016-2020), one can clearly see the VMT steadily rose with his economic success until Covid.
- The Biden economy has yet to recover to trend line after Covid, though it is getting close. However, this has only been due to Biden’s stimulus of a whopping $7.7 trillion as of February 2022.
The talk of inflation, recession, and geopolitical concerns, maybe indicate that the current economic state is about as good as it gets. With the Ukrainian crisis triggering energy price shocks, we could see Americans begin to move less and stay home – further putting downward pressure on the economic growth story.
See more Chart of the Day posts.
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RWR original article syndication source.
Source: Chart of the Day: What Does Milage American’s Travel Say About Our Economic State?
Category: Economy, RWR, Biden Economy, Chart of the Day, remote working, Trump economy, Vehicle Miles Traveled
