Transportation Economic Trends
Transportation as an Economic Indicator: Transportation Services Index
Transportation plays a vital role in the American economy; it makes economic activity possible (e.g., connecting producers to raw materials) and is a major economic activity in its own right. These ties to production and consumption make transportation a useful indicator about the status of the economy. This page discusses the Transportation Services Index as an economic indicator.
Demand for Transportation Services | Freight Transportation's Relationship to the Economy | Passenger Transportation's Relationship to the Economy | Transportation Modal Data | Documentation and Data Download
Demand for For-hire Transportation Services
Transportation Services Index
The Bureau of Transportation Statistics’ (BTS’) Transportation Services Index (TSI) measures the volume of freight and passenger transportation services moved monthly by the for-hire transportation sector in the United States. BTS produces three indexes: a freight index, a passenger index, and a combined index. The indexes incorporate monthly data from multiple for-hire transportation modes.
Changes in the Transportation Services Index (TSI) reflect changes in the demand for goods and services. For example, in periods of economic expansion the demand for goods and services typically increases, which in turn increases the demand for transportation reflected by an increase in the TSI.
Full data can be downloaded from BTS' Transportation Services Index data page.
Demand for Transportation Services | Freight Transportation's Relationship to the Economy | Passenger Transportation's Relationship to the Economy | Transportation Modal Data | Documentation and Data Download
Freight Transportation's Relationship to the Economy
Freight Transportation Services and the Economy
BTS research shows that changes in the freight TSI occur before changes in the economy, making the TSI a potentially useful economic indicator. This figure illustrates the relationship between the freight TSI and economic accelerations (periods of economic growth) and slowdowns. The freight TSI tends to turn before an economic acceleration or slowdown occurs.
Freight Transportation Services and Gross Domestic Product
Gross Domestic Product (GDP) includes the monetary value of all goods and services produced within the United States. To produce more goods and deliver them to consumers, industries require additional freight transportation services. Thus, GDP and freight activity, as measured by the freight TSI, tend to rise and fall at the same time, although at different magnitude if the sectors driving GDP growth are not dependent on freight transportation.
Industrial Production, Manufacturers' Shipments, and Freight Transportation Services
Industrial production and manufacturers’ shipments generate major sources of demand for freight transportation services. The demand for freight transportation services, as measured by the freight TSI, tends to increase when industrial production and manufacturers' shipments grow.
Inventories-to-Sales Ratio and Freight Transportation Services
When businesses keep greater amounts of inventory on hand—indicated by a high inventories-to-sales ratio—they use less freight transportation. Thus, when the inventories-to-sales ratio increases, the freight TSI tends to decrease at the same time or soon after and vice versa.
Demand for Transportation Services | Freight Transportation's Relationship to the Economy | Passenger Transportation's Relationship to the Economy | Transportation Modal Data | Documentation and Data Download
Passenger Transportation's Relationship to the Economy
BTS research shows that changes in the passenger TSI lead the business cycles of recession and expansion, by approximately four months. Business cycles are periods of expansion or recession in the economy. During expansions, the economy is growing in real terms (i.e., excluding inflation), as evidenced by increases in indicators like employment, industrial production, sales and personal incomes. During recessions the economy is contracting, as measured by decreases in the above indicators. Expansion is measured from the trough (or bottom) of the previous business cycle to the peak of the current cycle, while recession is measured from the peak to the trough. In the United States, the National Bureau of Economic Research (NBER) determines the official dates for business cycles.
Transportation Modal Data
To portray real changes in the TSI, BTS seasonally adjusts the modal data before creating the freight, passenger, and combined index.
Freight Transportation Modal Data
This figure shows seasonally-adjusted freight data included in the freight TSI and combined TSI. While most modes increased, rail carloads declined due to reductions in coal shipments. Particular events impacted some modes more than others. For example, a weak global economy from roughly 2011 to the end of 2013 caused air freight traffic stagnation.
Passenger Transportation Modal Data
This figure shows the for-hire passenger transportation data included in the passenger TSI and combined TSI.
As in the for-hire freight transportation data, the data highlight events affecting particular modes. For example, the September 2001 terrorist attacked caused a declined in air revenue passenger miles.
Recommended citation
U.S. Department of Transportation, Bureau of Transportation Statistics, Transportation Economic Trends, available at www.bts.gov/product/transportation-economic-trends.
Full data can be downloaded from BTS' Transportation Services Index data page.
Learn More
Papers
- What the Transportation Services Index, Dow Transportation Index, and Cass Freight Index Tell Us (August 2019)
- Long Term Growth in Freight Transportation Services (December 2017)
- TSI and the Economy Revisited (December 2014)
