Two Growing Trends In The US Economy
- Posted by TheArmoTrader
- on March 13th, 2012
People are changing their ways and habits. There is a structural shift going on. People are finding ways to save money and be more efficient. This is partly due to weak wage growth and rising gas prices. Another reason is a slow, but structural shift from a consumption based-economy to an access economy.
The first growing trend has to be the rise in public transportation. Just yesterday (March 12), it was reported by the American Public Transportation Association (APTA) that public transportation was up 2.3% since 2010. In 2011, Americans took 10.4 billion trips on subways, trains, trolleys, and buses. This was the second highest number since 1957.
As you see below on the monthly FRED chart, the inflation rate of public transportation oscillated between 5-10% for most of the year only to close the year up about 2.5% compared to last year at the same time.
In case you were wondering what classifies as public transporation, the BLS breaks it down to 2 parts.
- Intracity travel: Mass Transit, Taxis & limousines, Private School Bus, Taxi and limo fares on trips, local transportation on trips
- Intercity Travel: Airline, Intercity bus, intercity train, and ship.
The monthly FRED chart below shows private transportation which was up more than public transportation. This makes the above reported statistic by the APTA make more sense. If people have an alternative way to get to wherever they are going, and it is cheaper, they are likely to take that.
- Private transportation includes: New and used motor vehicles, Motor Fuels, and other related motor components (Parts & equipment, Maintenance & Repair, Insurance, and Fees).
The fact that in ‘motor fuel’, gas is included, it is going to make this CPI sub-component more volatile & likely more inflated. Its not a surprise that more people are switching to public transportation.
Another place where Americans are changing their habits is with food. People are eating out more. Today, Nomura had a note out about dining out.
“Nomura Securities’ analysts noted that dining out, a category they watch for signs of shopper fatigue, was up 1.8% in February and has risen for 10 straight months”.
That is an impressive streak. You would think with rising gas and food costs, Americans would eat in less. However, when you figure people are taking more public transportation, this probably gives them a better opportunity to catch something on the road, likely somewhere cheap. Companies are also doing a good job in managing costs (See Chipotle $CMG).
Food away from home
The sub-Components of this are: Full Service meals & snacks, Limited Service meals & snacks, Food at employee sites & schools, Food from vending machines & mobile vendors, and Other food away from home.
While costs were rising all of 2011, they were not up as much as ‘food at home’.
Food at home
(Click here to see all the components. Too many to list.)
There was a small dip late in the year, however, most of the 2011 costs were going up, faster than food away from home. Based on the statistic cited by Nomura, looks like people are responding to the rising costs at home and eating out more.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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