Transportation Services Index and the Economy [2007]

The March 2005 release of the Transportation Services Index (TSI), an economic measure of freight and passenger movements, 1 marked the Bureau of Transportation Statistics' (BTS') entry into the company of federal statistical agencies that produce monthly U.S. economic indicators. The TSI consists of three component indexes: a freight index, a passenger index, and a combined (or total) index. Figure 1 shows the freight and passenger indexes as recently displayed on the BTS website. The TSI is the broadest monthly measure of U.S. domestic transportation services and, as such, provides the best current measure available of these services. As an index, the TSI reflects real monthly changes in freight and passenger services in the United States. After development of the TSI, followed by additional research, it became clear the TSI moved in conjunction with other indicators of the national economy. Cycles of various kinds, depths, and durations occur frequently in the U.S. economy. Of these, the business cycles of recession and expansion, and the growth cycle are of particular interest to economists. The TSI, as presently published on the BTS website, spans the time period from 1990 to the present and covers two recessions. But, extending the TSI back to 1979 allows coverage of four recessions2 and numerous growth cycles. By comparing the turning points in the extended TSI with other economic data series, it is possible to ascertain whether and how transportation services relate to movement in the overall economy. Quantitatively exploring the relationships between the turning points of the TSI and measures of the broader economy reveal some interesting results. One finding is that the freight component of the TSI, which encompasses five modes of transportation, shows a strong leading relationship to the economy. When the accelerations and decelerations of the freight TSI (the turning points in the detrended series) are compared to the growth cycles of the economy, the freight measure leads by an average of approximately 4 to 5 months. The passenger TSI was identified as a coincident indicator with the general economy.