Saturday, May 2, 2009

Green Shoot Alert: Higher Unemployment Leads to Less Road Congestion

I am feeling left out by the Green Shoot Parade - so please let me add my own. The Wall Street Journal reports that the masses of unemployed Americans are leading to significantly shorter commute times for those that still have jobs. There you have it, always a silver lining - I am ready for my Kudlow Show appearance.

Now the irony is last spring and summer Americans were driving less miles because gas had shot up... now just imagine how much less congestion we will have if Ben Bernanke's master plan for stagflation works - printing money left and right to drive up the price of commodities while unemployment continues upward to 10%+ (using government figures). I might be able to bike on the freeways if Ben is successful at getting us back to $4 gas.
  • As unemployment rises and discretionary income shrinks, millions fewer Americans are driving. For commuters, that means some of the worst bottlenecks in the country are easing. Americans drove 8.6 billion fewer miles in January and February than during the same months in 2008, according to the U.S. Department of Transportation. Mileage has been declining since the end of 2007.
  • Rush-hour congestion -- defined as moving slower than free-flowing traffic -- in the 100 largest U.S. metropolitan markets fell 29% in 2008 versus 2007. It fell an additional 7% in this year's first quarter.
  • Also critical is the reduction of unpredictable traffic jams caused by fender-benders and vehicle breakdowns that frequently accompany congested commutes.
  • In some cities the drop is more pronounced. Congestion has abated 36% in Atlanta; 57% in Tucson, Ariz.; 68% in Colorado Springs, Colo.; and 70% in Daytona Beach, Fla. In Riverside, where Ms. Caldera lives, it fell by 57%. Among the largest 100 metropolitan areas, congestion shrank in all but Baton Rouge, La.
  • Amer Suifan has driven a taxi here for 17 years (Chicago), but said he has never zipped around the city this fast. He can make it from downtown to O'Hare International Airport during rush hour in 30 minutes; from Wrigley Field to Hyde Park after a Chicago Cubs game in just 22 minutes. "There's nobody on the roads," said the 43-year-old father of five. "Everywhere, it's empty." "After a game at Wrigley, there used to be 100 people waiting for a cab," he said. So far this season, he said, patrons are trying to save their cab fare. "Now they're all taking the bus."
  • "There's a major difference from last year," said Julie Caldera, a secretary in Riverside, Calif., where Inrix found congestion declined sharply last year. Ms. Caldera commutes 20 miles for work each way. Last year, her morning drive took 45 minutes; this year, she said she is at her desk in less than half an hour.
  • Among those hardest hit are the nation's turnpikes. Both public and private toll authorities are scrambling to counter declines in traffic with rate increases and employee layoffs, said Peter Samuels, editor of Tollroads News, which covers the industry. Mr. Samuels said about half of the 40 largest toll authorities in the country have raised rates in the past year.
  • The decline in miles driven began when gasoline prices crept above $3 a gallon in November 2007. By the time prices began to retreat from their $4-a-gallon high in mid-2008, the number of unemployed Americans began to rise.
I want you to think about the blurb below as you consider the veracity of government data on unemployment versus my (and others) contention of how skewed they have made it versus pre 1990s.
  • No drop of such significance has been previously recorded. With the exceptions of a few short-lived dips during previous recessions, Americans have driven more every year since national record-keeping began.
So even in the late 70s when we had GAS shortages, and double digit INFLATION, and unemployment rates (cough) "higher" than we do now, we did not see a drop like this. The talking heads continue to cling to government reports - which have been skewed the past 2 decades to the upside - to claim it's "not as bad" as the late 70s/early 80s because the data doesn't say so. Fed officials (who have missed almost every part of this downturn) now talk of how we won't reach levels of unemployment we saw in the double dip recession of 30 years ago. It's lies - we're already FAR ahead of the upper 10% unemployment rate we reached back then, and we're still headed up [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] This driving data is just another coincident indicator of those lies.

Ever hear of garbage in, garbage out? That's how data works. But fellow Americans, we can't handle the truth. So this Friday we'll have another employment report, that is garbage - and understates what is happening in the real world. But as long as we close our eyes, click our heels together and state 3 times - there is no place like green shoots, there is no place like green shoots, there is no place like green shoots - we can take this S&P to new highs in a few more months. Let's do this.

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