Booming Economy Means Gridlock

The following article was written by Rob Upbin featured on www.forbes.com. You can read the full article at the posted link. Gwynn Logistics claims no ownership of this article.

 

“In a bumper to bumper jam while reading this? For the 33% of our readers who are on smartphones, you’re breaking the law if you’re driving. The rest of you can rest assured that your city is in recovery. According to the most recent numbers from the Inrix Gridlock Index, U.S. road congestion jumped 9.4% in April (see chart below), the second largest year-over-year increase since Inrix began recording data in January 2010, and just shy of the record set in February.

Traffic congestion data is supposed to indicate that more businesses are buying, workers are commuting and shoppers are shopping, but one might also think too much traffic would be counterproductive to a metro area’s economy. Turns out not to be the case. A couple of years ago economist Eric Dumbaugh of Florida Atlantic University found that congestion, is nicely correlated to per-capita GDP growth in that area. Inrix’s European congestion data reflects the economies there: In 2012 Portugal experienced the biggest traffic decline (-50%), followed by Spain (-38%) and Italy (-34%).

But even if the U.S. and European traffic data do correlate, as an economic indicator it is a lagging one and a bit noisy. The chart above shows traffic levels in negative territory from April 2012 through November 2012, a period of rising home prices and consumer confidence and falling unemployment claims. What’s puzzling (and not shown in these charts) is why the congestion index, despite its recent sustained rise, is still half of what it was in January 2010 when the economy was far worse than it is now. (My colleague Brett Nelson argues based on some other stats that the economy isn’t as healthy as it appears.) Going back a bit further, Inrix’ index rose every month from September 2008 to January 2009, a period when the economy was still in recession.

The data becomes more useful when you pick it apart by geography. The chart below shows big fluctuations in traffic in the Midwest, which is not known to be a volatile economic zone. Yet the fact that cities in the South have grown less congested than anywhere else does gel with economic indicators from April’s Fed Beige Book, which showed mixed sales activity and lower expectations for manufacturing activity in cities such…”

Read the rest of this article at www.forbes.com

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