Wednesday, February 10, 2010

Ceridian - UCLA Pulse of Commerce Index

The Ceridian - UCLA Pulse of Commerce Index tracks fuel purchases at 7000 truck stops around the country, and the idea is that the index will mirror industrial production providing a timelier snapshot into the state of the economy. The index was developed by the UCLA Anderson Center in conjunction with credit card processor Ceridian.

I want to thank TL for bringing this interesting data point to our attention. See the "Morning News Notes".

Figure 1 shows the Ceridian - UCLA Pulse of Commerce Index (blue line) v. industrial production (yellow line) going back to 2000; recessions are highlighted. The index relies on real time data and according to Ed Leamer, director of the Anderson forecast, "the interstates are the arteries of the system," and so credit-card swipes for fuel are a perfect insight into how much freight is moving and where.

Figure 1. Ceridian-UCLA Pulse of Commerce Index

With regards to the current value, Leamer stated: “Though the January 2010 number is disappointing, the index is 3.6 percent above its January 2009 level and is similar to year-over-year pre-recession values. The three-month moving average is 2.3 percent above the previous year's value, which is the first time that there has been a year-over-year increase since April 2008, 21 very difficult months ago." Furthermore, January's value "does not portend the kind of economic growth that can offer significant improvements in the labor market.”

To read more about the Ceridian - UCLA Pulse of Commerce Index check out the following links:


Dave Narby said...

As an uber-bear (I think we will need a new currency system in 1.5-2 years), I had to think about this one for a minute, as on the surface it looks pretty good.

The problem here for the bulls is thinking that simple mean reversion will take place.

If you take a close look at the curve prior to the first recession noted, you'll see a *very small dip*. To me this was predictive of a 'typical' cyclical/inventory recession.

The one that followed had less warning and was much more severe.

Also, several factors can skew this chart, e.g. increased fuel efficiency of trucks, increased mileage driven (more truck shipping than rail), etc.

That said, this seems a useful indicator to be used in conjunction with others. As you've noted, no one indicator is the Holy Grail.

Guy M. Lerner said...


Good is fascinating data and very real time

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