Over the summer, we considered May’s Vehicle Miles Travelled (VMT) figure as an indicator for the state of the economy and gasoline demand. High VMT would imply increased economic activity and job-related travel. At the time, May’s figures were less than bullish, and we stated in the July 27th issue of The Schork Report:
“In real terms, annual VMT has been decreasing from a peak of 3.04 trillion (×1012) miles in November 2007 to 2.93 trillion in November 2008. So May’s 0.07% increase in VMT over May 2008 is less bad instead of good” July’s Vehicle Miles Travelled (VMT) figures were released last week, with total miles driven clocking in at 263.4 billion miles, up 2.3% from July 2008. That is a solid increase, but keep in mind, gasoline prices have decreased by 38% since last year. Further, July 2008’s VMT figure was 3.5% lower than July 2007. Therefore, this year’s “increase” was 1.3% below 2007 and 0.5% below the 03-07 timestep, thereby continuing that steady VMT decline.”
However, as with many of the coincident indicators today, the VMT is improving month by month. For instance, July’s 2.3% year-on-year increase is the largest we’ve seen for any month this year, in stark contrast to the 2.9% decrease in Jan 09 against Jan 08. Further, the annual cumulative miles travelled value is now commensurate to the same period last year, while May was down 0.8%.
Of course, seasonality plays a role. The months of July and August represent the peak of the driving season. Therefore, intuitively, if you had to guess which month would show the largest year-to-date comparison, July would be a pretty good place to start. Conversely, if you had to pick a month with poor demand, than January or February, when half the country’s roadways are covered in snow, ice, salt or potholes, is where we would first start looking.
Be that as it may, quantitatively, the 263.4 bn miles figure is 2.2bn less than the 265.6 bn miles predicted by our forecasts. But as the graph below shows, actual VMT figures are catching up to the projections – a 2.2bn shortfall seems reasonable considering June’s figures were 4.2bn less than forecast and May’s were 7.5 bn below seasonal expectations i.e. this year’s summer driving kicked in late, but at least it kicked.