In The News

New diesel index shows state of economy

A new index, which projects the state of the U.S. economy based on how much diesel fuel heavy trucks are using, indicates that the economy cooled off a little in January.

The so-called “Pulse of Commerce” index was created by economists at UCLA who partnered with the business services company Ceridian, which owns Comdata.

Ceridian issues credit cards that are good at about 7,000 truck stops. Each time fuel is bought, the purchase is immediately noted in the Pulse of Commerce system.

The economists say diesel fuel purchases in January were much lower than in December of this past year but that generally the trend is moving slowly upward. In fact, the January 2010 index reflected a 3.6 percent improvement over January 2009.

UCLA economist Ed Leamer, Ph.D., told Land Line Now why diesel is an economic indicator instead of something else.

“We use the words “a pulse of commerce” to describe this thing,” Leamer said. “That metaphor is a reference to the interstates that criss-cross the country being the arteries of the system. And the products that are flowing on those arteries are the lifeblood.

“Without the movement of product, the U.S. economy’s going to come to a crashing halt. ... It’s hard to imagine anything more critical than the movement of products and trucks around the country.”

The trucking industry has long been viewed as an indicator of the nation’s overall economic health. But the new index is the first time the health of the economy has been linked directly to diesel fuel consumption.

Leamer says they also went back and compared diesel fuel purchases in the past. And drops in diesel consumption accurately forecast both of the last two major recessions.

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