The Freight Transportation Services Index as a Leading Economic Indicator
Source: Bureau of Transportation Statistics

The Bureau of Transportation Statistics’ (BTS) freight Transportation Services Index (TSI) showed a decline a full year and a half prior to the start of the current recession. This downturn suggests the TSI may prove particularly useful as an indicator of economic downturns. Leading economic indicators identify and anticipate emerging turns in the current business cycle by historically turning downward before a recession or a slowdown in the economy and upward before an expansion or acceleration. According to BTS research, over the past three decades the freight TSI led slowdowns in the economy by an average of 4-5 months.

The TSI is the broadest monthly measure of U.S. domestic transportation services and, as such, provides the best available current measure of these services. As an index, the TSI reflects real monthly changes in freight and passenger transportation services in the United States.

Research on the history of the TSI (from 1979 through 2007) showed that the freight component of the TSI, which encompasses five modes of transportation, demonstrated a strong leading relationship to the economy. When the accelerations and decelerations of the freight TSI are compared to the growth cycles of the economy, declines in the freight TSI led decelerations in the growth cycle.

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