Political  Calculations

Can we use the odometers in the vehicles driven by millions of Americans to tell if the United States is experiencing an economic recession?

Let's find out! Each month, the U.S. Department of Transportation publishes a report on Traffic Volume Trends in the United States, where it adds up all the billions of miles that have been traveled on the nations roads over the preceding twelve months. The most recent report extends through November 2011.

But how can we use that report to tell if Americans are experiencing an economic recession?

Recessions are periods where economic activity is either greatly reduced or even turns negative. Since traveling is an economic activity, we should expect to see the distance that Americans collectively travel in a recession to follow a similar pattern, which we would observe in the form of a slower rate of growth or even a negative rate of growth.

Odometer - Source: U.S. DOTSince the U.S. Department of Transportation has been publishing its Traffic Volume Trends report, there have been three recessions, as determined by the National Bureau of Economic Research: July 1990 through March 1991, March 2001 through November 2001 and December 2007 through June 2009.

We've created three graphs from the DoT's data, each spanning an eight year period, which show each of these recessions. The first covers the period of time from November 1989 through November 1996:

U.S. Total Vehicle Distance Traveled Over Previous 12 Month Periods, November 1989 - November 1996

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

Be the first to read Political Calculation's column. Sign up today and receive Townhall.com delivered each morning to your inbox.


Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!