Economists track growth through diesel consumption

February 10, 2010 7:14:31 PM PST
There is a new economic indicator that measures how our economy is growing -- truck drivers. Diesel fuel transactions are being monitored to see the movement of goods to factories and retailers. This spike in gas consumption, up or down, is said to be relevant to the economy.

A company by the name Ceridian has been tracking how much truck drivers spend at the pump. They noticed that when fuel consumption went up the economy improved, when consumption went down, the economy got worse. That is when economists at UCLA said "you may be on to something."

In January, truck drivers across the nation made a few more stops at the pump. This means more of the products inside their trucks were finding their way to more stores.

"And the goods being carried on the trucks are the life blood and if we don't move that product, the economy dies," economist Ed Leamer said.

Leamer is the director of the UCLA Anderson Forecast. He was at California State University East Bay Wednesday and talked about the new one-of-a-kind economic indicator called "pulse of commerce."

Leamer says yes, there were slightly more diesel fuel purchases, but not enough to see a sharp increase in the gross domestic product.

"Sorry, this next year is going to be a trouble year; we are going to have economic growth, but not the kind of economic growth that is going to put a lot of Americans back to work anytime soon," he said.

Truck drivers used a Ceridian MasterCard to gas up at 7,000 locations around the nation. Ceridian tracked the fuel spending, immediately entering it into a database; economists at UCLA then analyzed the data.

ABC7 went out to ask truck drivers how much fuel they were spending.

"A little bit more, a little bit more; it's not enough to where you say, 'Oh, I'm burning two tanks a week," truck driver Michael Shockley said.

Leamer says in order to have exceptional economic growth, consumers need to buy homes and cars in big numbers and that is not happening.

The economy is healing -- but slowly.

He says in California the housing market has bottomed out, home prices are stabilizing especially in inland areas.

"Pretty soon I think it will get better, I hope," truck driver Everol Reid said.

This new way to track the economy will be done every month.

"Watch the pulse in February and March, if we get some good numbers there, you'll see a smile on my face," Leamer said.

Leamer was one of the first economists to see the housing bubble coming and warned about it in June 2002. The article was called "Bubble Trouble."