Should Transportation Output Be Included as Part of the Coincident Indicators System?

Abstract

With the increasing importance of the service-providing sectors, information from these sectors has become essential to the understanding of contemporary business cycles. This paper explores the usefulness of the transportation services output index (TSI) as an additional coincident indicator in determining the peaks and troughs of U.S. economy. The index represents a service sector that plays a central role in facilitating economic activities between sectors and across regions, and can be useful in monitoring the current state of the economy. We evaluate the marginal contribution of the TSI in identifying cyclical turning points in the context of four currently used NBER indicators. The TSI is found to have advantages over the composite index of coincident indicators in identifying turning points, and has been of critical importance in recent recessions. JEL-Code: E320, C100.

The Daily Economic Indicator: tracking economic activity daily during the lockdown

“…However, their use to track business cycle fluctuations has been rather limited. One of the reasons behind this refers to a non-negligible release lag of these statistics, a situation that has been circumvented with the rise of systems with electronic toll collections that allow these statistics to be more promptly available (see also Lahiri and Yao (2012) ). Moreover, Askitas and Zimmermann (2018) consider transportation activity performed by heavy transport vehicles across Germany to track the general state of the economy, while Fenz and Schneider (2009) use this type of data to predict Austrian exports.…”