Chapter 1 Transportation Services Index (TSI) and Its Characteristics

In this chapter we develop a monthly output index of the U.S. transportation sector covering air, rail, water, truck, transit, and pipeline activities. We call it the transportation services index (TSI). Separate indexes for freight and passenger are also constructed. Before the development of TSI, there was no comprehensive monthly measure of the economic activity by all modes of transportation. Since policymakers are increasingly concerned about the critical role transportation plays in enabling economic growth, monitoring of TSI can provide them with insights about the current and future state of the economy. Fortunately we find that our monthly transportation services output index (TSI), which is based on a new measurement approach, matches very well with the annual transportation output figures produced by the Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA). Some analysis reported in this chapter indicate that the cyclical movements in the transportation output appear to be more synchronized with the growth slowdowns rather than full-fledged recessions of the U.S. economy. The index has led the turning points of the 6 National Bureau of Economic Research (NBER)-defined growth cycles over the period with an average lead-time of 6 months at peaks and 5 months at troughs.