Economic activity almost always requires travel. Whether commuting to work, driving to a store, getting goods delivered, or taking a vacation, more miles driven and more gasoline used means higher economic activity. This is not controversial, as we discussed a few years ago.
So, it comes as a surprise that these measures of broad-based economic activity (gasoline consumed and miles driven) are falling hard at a time when most economists are in agreement that the economy has been getting better in recent months. If the economy is indeed getting better, it seems to be happening while we are driving less and consuming less gasoline. For the American economy, this is really hard to do. It has never happened before in the data shown above. All other instances of declining miles and gasoline consumed occurred in or around a recession.
We would not suggest that these economic indicators trump all others and the economy is actually worsening. But it is disconcerting that these measures of critically economic activities are heading lower in a hurry.
Maybe these two measures are sending false signals, but it is possible they are really pointing the way for a faltering economy. For now we will watch these measures and report on them in coming weeks to see if they eventually square with other broad-based measures of the economy that say things are getting better.
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Notes to myself, possibly of interest to others.
-- Bill Northlich
Thursday, February 16, 2012
Slowdown Theme Ctd. ZH Data on Energy.
Vitus is not a big fan, or even a fan, of Zerohedge. However, credit where credit is due. Recently they have been showing data indicating a dramatic slowdown in energy consumption in the US, seemingly unexplained by anything other that that we are quickly heading towards a huge economic slowdown. Others, including Ritholtz (What does declining Gasoline Consumption Mean) have picked up on the theme. Here are a couple of charts, from this and this ZH post, and from the Ritholtz post. Previous work from Mish. See also our post yesterday. The money quote is actually from James Bianco via Ritholtz: