the role of transportation in the u.s. economy
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The Role of Transportation The Role of Transportation in the U.S. Economyin the U.S. Economy
Presentation to the National Surface Transportation
Policy and Revenue Study Commission
June 26, 2006
Jack Wells
Chief Economist
U.S. Department of Transportation
Scope of the Transportation Scope of the Transportation SectorSector
NIPA accounts show Transportation as NIPA accounts show Transportation as 2.9% of GDP in 2004 (for-hire only)2.9% of GDP in 2004 (for-hire only)
Adding in In-house Transportation Adding in In-house Transportation increases the total to about 4.9%increases the total to about 4.9%
GDP produced for a Transportation GDP produced for a Transportation purpose: 11.2%purpose: 11.2%
Adding in the Household sector raises Adding in the Household sector raises Transportation to about 18.6% of GDPTransportation to about 18.6% of GDP
Growth in Passenger and Ton Miles
0
1
2
3
4
5
6
1960 1970 1980 1990 1996 1998 2000
Mile
s (M
illio
ns)
Passenger-miles
Ton-miles
Year
Growth in Freight Relative to GDP
0
50
100
150
200
250
300
350
1965 1975 1985 1995 1997 1999
Year
GDP
GDP for Goods
Ton-miles
Transportation is particularly Transportation is particularly important to certain industriesimportant to certain industries
Input-output data show transportation is Input-output data show transportation is 12 % of Agricultural Fertilizers and Chemicals12 % of Agricultural Fertilizers and Chemicals 10 % of Steel and other Metals10 % of Steel and other Metals 9 % of Coal9 % of Coal 8 % of Chemicals8 % of Chemicals 8 % of Motor Vehicles8 % of Motor Vehicles 8 % of Food8 % of Food High percentages of Stone and Clay, Livestock, High percentages of Stone and Clay, Livestock,
Paper, Paints, Rubber, Lumber, and PlasticsPaper, Paints, Rubber, Lumber, and Plastics
Why is Transportation Critical Why is Transportation Critical to These Industries?to These Industries?
Freight Transportation is important Freight Transportation is important because of thebecause of the Weight of goods that must be carriedWeight of goods that must be carried Distance that goods must be carriedDistance that goods must be carried Speed that goods must be carriedSpeed that goods must be carried
Weight of GoodsWeight of Goods
Industries that use heavy inputs or outputs Industries that use heavy inputs or outputs includeinclude Construction (stone and gravel)Construction (stone and gravel) Steel and other metalsSteel and other metals AgricultureAgriculture Energy (coal and oil)Energy (coal and oil) ChemicalsChemicals
Distance of GoodsDistance of Goods
Industries that must move goods over Industries that must move goods over great distances includegreat distances include Energy (coal and oil)Energy (coal and oil) Retail tradeRetail trade AgricultureAgriculture
Speed that Goods Must be Speed that Goods Must be CarriedCarried
Perishable commoditiesPerishable commodities Flowers, fresh foodsFlowers, fresh foods Fashion merchandiseFashion merchandise High-Technology productsHigh-Technology products
High-value commoditiesHigh-value commodities High value creates incentives to reduce inventory High value creates incentives to reduce inventory
carrying costs by reducing transportation timecarrying costs by reducing transportation time PharmaceuticalsPharmaceuticals ElectronicsElectronics
Labor ProductivityTransportation vs. All U.S. Business, 1990-2000
80
100
120
140
160
180
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Year
Ind
ex
(19
90=
10
0)
U.S. Business
Air Transp
Local Trucking
Rail
Trucking, except local
Source: Bureau of Labor Statistics
Petroleum Pipeline
Changes in Average Length of Haul
0
200
400
600
800
1,000
1,200
1,400
1,600
1960 1970 1980 1990 1996 1998 2000
Mile
s
Air
Rail
Truck
Year
U.S. International Merchandise Trade and GDP1970-2001
(In current dollars)
-
500
1,000
1,500
2,000
2,500
1970 1975 1980 1985 1990 1995 2000
Ind
ex o
f cu
rre
nt
do
llars
(19
70=
100)
Merchandise Trade
Gross Domestic Product
Source: BTS, based on BEA dataYear
“The greatest improvements in the productive powers of labor . . . seem to have been the effects of the division of labor. . . . The division of labor is limited by the extent of the market.”
-- Adam Smith, Wealth of Nations, 1776
Domestic Freight Ton-Miles by Mode1991-2001
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Ind
ex 1
991
= 1
.0
AirRailroad
Truck
Oil and Gas Pipelines
Water
Year
Source: Bureau of Transportation Statistics
1980 1985 1990 1995 2000
50
60
70
80
90
100
110
120
Start ofthe latestrecession
Sep-01
Jul-02
Apr-00
Dec-99
Apr-79
Feb-88
Jul-89
Aug-90
June-91
Start ofthe latestrecession
NBER-defined recession NBER-defined slowdown
Dec-80
May-03
Freight Transportation Output Index (FTOI)
Business Travel and Leisure Travel
18%
82%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Business Leisure
Percentage of Business Trips by Distance to Trip Destination
41%
33%
12%
5% 3%7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50-99miles
100-249miles
250-499miles
500-749miles
750-999miles
1000+miles
1980 1985 1990 1995 2000
60
70
80
90
100
110
120
Impactof 9/11
Sep-01
Dec-02
Start ofthe latestrecession
Jan-03
NBER-defined recession
Noc-00 Aug-01
Aug-02
Nov-79
Feb-89
May-81
May-03
Passenger Transportation Output Index (PTOI)
Average Hourly Earnings - Transportation vs. Total Private Sector
6
6.5
7
7.5
8
8.5
9
9.5
10
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Month/Year
19
82
Do
llars
Source: Bureau of Labor Statistics
Total Private Sector
Transportation and Public Utilities
Roadway Congestion Index
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1982 1985 1990 1995 1996 1997 1998 1999 2000
YearSource: Texas Transportation Inst
TTI Estimates Leave Out TTI Estimates Leave Out Many Congestion CostsMany Congestion Costs
Billions of dollars
TTI estimates of delay and fuel waste 63.1
Cities not included in TTI estimates 12.8
Productivity losses 38.0
Unreliability losses 38.0
Truck cargo delays 3.8
Safety and environmental costs 12.6
Total highway congestion costs 168.3
Congestion Costs are Growing Congestion Costs are Growing Faster than GDPFaster than GDP
Since 1982, the cost of congestion has Since 1982, the cost of congestion has grown at 8 % per year, more than double grown at 8 % per year, more than double the rate of growth of the economythe rate of growth of the economy
In 20 years, continued growth at this rate In 20 years, continued growth at this rate would bring the cost of congestion to would bring the cost of congestion to $890.5 billion $890.5 billion
Equal to 4.3 % of GDPEqual to 4.3 % of GDP
Congestion is Growing Faster in Congestion is Growing Faster in Rural Areas and Small CitiesRural Areas and Small Cities
Congestion has traditionally been an Congestion has traditionally been an urban phenomenonurban phenomenon
But congestion is growing most rapidly in But congestion is growing most rapidly in rural areasrural areas
From 1992 to 2002, traffic per lane-mile From 1992 to 2002, traffic per lane-mile grew grew 35 % on rural interstates35 % on rural interstates 21 % on urban interstates21 % on urban interstates
Rural congestion particularly affects freightRural congestion particularly affects freight
Congestion is growing more Congestion is growing more rapidly in smaller citiesrapidly in smaller cities
TTI found congestion costs grew from TTI found congestion costs grew from 1997 to 2003 –1997 to 2003 – 24% in Very Large Cities24% in Very Large Cities 26% in Large Cities26% in Large Cities 36% in Medium Cities36% in Medium Cities 56% in Small Cities56% in Small Cities
Real Net Capital Stock for Transportation and Other Industries
0
1
2
3
4
1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997
Years
Log (
$B)
Highway
Other Industries
Railroad
Motor Vehicles
Government Revenues Generated by Transportation
-20,00040,00060,00080,000
100,000120,000140,000
1985 1987 1989 1991 1993 1995 1997 1999 2001
Year
Dolla
rs ($
Milli
ons) All Levels
Federal Highway
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