Tag Archive for 'economy'

Action Needed to Reduce Traffic Congestion’s Impact on Drivers, Businesses and Local Economies

America’s traffic congestion recession is over. Just as the U.S. economy has regained nearly all of the 9 million jobs lost during the downturn, a new report

produced by INRIX and the Texas A&M Transportation Institute (TTI) shows that traffic congestion has returned to pre-recession levels.

According to the 2015 Urban Mobility Scorecard, travel delays due to traffic congestion caused drivers to waste more than 3 billion gallons of fuel and kept travelers stuck in their cars for nearly 7 billion extra hours – 42 hours per rush-hour commuter. The total nationwide price tag: $160 billion, or $960 per commuter.

Washington, D.C. tops the list of gridlock-plagued cities, with 82 hours of delay per commuter, followed by Los Angeles (80 hours), San Francisco (78 hours), New York (74 hours), and San Jose (67 hours).

The problem has become so bad in major urban areas that drivers have to plan more than twice as much travel time as they would need to arrive on time in light traffic just to account for the effects of irregular delays such as bad weather, collisions, and construction zones. For example, drivers on America’s Top 10 worst roads waste on average 84 hours or 3.5 days a year on average in gridlock – twice the national average. Of these roads, six are in Los Angeles, two are in New York and the remaining two are in Chicago. Nine other cities have roads ranked among the 50 worst.

Scorecard findings also illustrate how traffic congestion isn’t just a big-city issue. Cities of all sizes are experiencing the challenges seen before the start of the recession – increased traffic congestion resulting from growing urban populations and lower fuel prices are outpacing the nation’s ability to build infrastructure. Of America’s Top 10 Worst Traffic cities, 7 of them experienced population growth outpacing the national average of 0.7 percent last year, including Los Angeles, San Francisco, San Jose, Seattle, Houston and Riverside, CA. Additionally, some of the worst traffic cities also experienced some of the largest decreases in fuel prices (-4.1 percent nationally) including Riverside, Houston, Los Angeles, San Jose, Boston and Chicago. The result, the average travel delay per commuter nationwide is more than twice what it was in 1982. For cities of less than 500,000 people, the problem is four times worse than in 1982.

“Our growing traffic problem is too massive for any one entity to handle – state and local agencies can’t do it alone,” says Tim Lomax, a report co-author and Regents Fellow at TTI. “Businesses can give their employees more flexibility in where, when and how they work, individual workers can adjust their commuting patterns, and we can have better thinking when it comes to long-term land use planning. This problem calls for a classic ‘all-hands-on-deck’ approach.”

Recent data from the U.S. Department of Transportation shows that Americans have driven more than 3 trillion miles in the last 12 months. That’s a new record, surpassing the 2007 peak just before the global financial crisis. Report authors say the U.S. needs more roadway and transit investment to meet the demands of population growth and economic expansion, but added capacity alone can’t solve congestion problems. Solutions must involve a mix of strategies, combining new construction, better operations, and more transportation options as well as flexible work schedules.

“Connectedness, big data and automation will have an immense impact over the next decade on how we travel and how governments efficiently manage the flow of people and commerce across our transportation networks,” says Jim Bak, one of the report’s authors and a director at INRIX. “This report is a great example of how data and analytics are evolving to provide transportation agencies with the insight needed to not only make our existing transportation systems work smarter but more quickly pinpoint where investment can have a lasting impact.”

The report predicts urban roadway congestion will continue to get worse without more assertive approaches on the project, program, and policy fronts. By 2020, with a continued good economy:

  • Annual delay per commuter will grow from 42 hours to 47 hours.
  • Total delay nationwide will grow from 6.9 billion hours to 8.3 billion hours.
  • The total cost of congestion will jump from $160 billion to $192 billion.

Findings in the Urban Mobility Scorecard are drawn from traffic speed data collected by INRIX on 1.3 million miles of urban streets and highways, along with highway performance data from the Federal Highway Administration. The vast amount of information, INRIX and TTI say, makes it possible to examine problems in greater detail than before, and to identify the effect of solutions at specific locations.

About INRIX

INRIX is one of the fastest growing big data technology companies in the world. The company leverages big data analytics to reduce the individual, economic and environmental toll of traffic congestion. Through cutting-edge data intelligence and predictive traffic technologies, INRIX helps leading automakers, fleets, governments and news organizations make it easier for drivers to navigate their world. Our vision is simple – to solve traffic, empower drivers, inform planning and enhance commerce.

Whether through an in-car or smartphone navigation application, a local newscast or our INRIX Traffic app, our up-to-the-minute traffic information and other driver services help millions of drivers save time, fuel and frustration. INRIX delivers traffic and driving-related insight, as well as sophisticated analytical tools and services across six industries covering nearly five million miles (7.9 million km) of road in 41 countries. For more information visit us at INRIX.com or download our INRIX XD Traffic App for iOS and Android.

About the Texas A&M Transportation Institute

The Texas A&M Transportation Institute is the largest university-affiliated transportation research agency in the U.S. and a member of the Texas A&M University System. Since 1950, the Institute has been dedicated to saving lives, time, and resources by addressing problems related to all modes of transportation. See more information about the study at mobility.tamu.edu.

 

http://mobility.tamu.edu/ums/

Construction Input Prices Trend Lower in Jul

CEU2“Key input prices fell or were flat in all but one category in July and further downward pressure on input costs is likely to be reflected in next month’s report.” —ABC Chief Economist Anirban Basu.

PPI July 2015Prices for inputs to construction industries declined 0.1 percent in July after increasing 0.2 percent in June, according to the Aug. 14 producer price index release by the Bureau of Labor Statistics. Year-over-year prices were down 3 percent in July and have been down on an annual basis for each of the past eight months. Prices of inputs to nonresidential construction industries declined 0.3 percent on a monthly basis and are down 3.9 percent on a yearly basis.

“Key input prices fell or were flat in all but one category in July and it is important to note that further downward pressure on input costs is likely to be reflected in next month’s report, as well,” said Associated Builders and Contractors Chief Economist Anirban Basu.

“The state of affairs today is unprecedented,” said Basu. “Nonresidential construction spending has been recovering robustly in the U.S. in recent months—up more than 11 percent on a year-over-year basis. On top of that, the multifamily building boom continues in most major U.S. metropolitan areas.

“All things being equal, these circumstances should correspond with rising construction materials prices,” said Basu. “But as a reflection of how global the economy has become, America’s nonresidential construction recovery is taking place in the context of collapsing commodity prices. The latest round of commodity price decreases has been spawned by softening growth in China and ongoing increases in production of key inputs worldwide, including oil. However, this form of deflation should not be troubling to contractors. If anything, it will tend to boost profit margins for the average contractor, though falling commodity prices do not represent good news for construction firms heavily invested in oil and natural gas segments. These falling prices also imply slower increases in interest rates going forward, which will help extend the ongoing nonresidential construction recovery.”

Below are the key input prices for the month and the year.

  • Prices for plumbing fixtures remained flat on a monthly basis and are up 1.2 percent on a year-over-year basis.
  • Softwood lumber prices expanded 6.2 percent in July, but are 3.7 percent lower than a year ago.
  • Concrete product prices fell 0.1 percent in July, but are up 3.8 percent on a yearly basis.
  • Crude energy materials prices declined 6.2 percent in July and are down 37.8 percent on a year-over-year basis.
  • Fabricated structural metal product prices fell 0.7 percent for the month and have declined 0.4 percent on a year-over-year basis.
  • Natural gas prices declined 1.9 percent in July and are 38.4 percent lower than the same time one year ago.
  • Iron and steel prices were down 1.1 percent in July and are down 15 percent from the same time last year.
  • Prices for prepared asphalt, tar roofing, and siding fell 0.1 percent for the month and are down 0.4 percent on a year-ago basis.
  • Steel mill products prices fell 1 percent for the month and are 13.2 percent lower than one year ago.
  • Crude petroleum prices fell 12.3 percent in July and are down 48.8 percent from the same time one year ago.
  • Nonferrous wire and cable prices fell 1.3 percent on a monthly basis and are down 5.2 percent on a yearly basis.

To view the previous PPI report, click here

THE WEEK AHEAD – FROM IHS GLOBAL INSIGHT

As predicted by IHS Global Insight, real GDP increased at a 2.3% annual rate in the second quarter. Consumer spending, up 2.9%, led the way with gains spread broadly across durable and nondurable goods and services. The first quarter of 2015 was revised up to 0.6% growth. These numbers are consistent with the Federal Reserve’s moderately upbeat assessment of the economy and the high probability of a September increase in the federal funds rate. Average real GDP growth for the 2011‒14 period was lowered from 2.3% to 2.0%. A drop in 2013 growth from 2.2% to 1.5% accounted for most of the revision. The newly reported weakness was concentrated in consumer spending and state and local government purchases.

Durable goods orders climbed 3.4%, driven by a surge in aircraft orders at the Paris Air Show. Core capital orders rose 0.9%; two-thirds of the increase was in the machinery category. Despite July’s increase, orders and shipments for core capital goods have dropped three straight quarters.

The Employment Cost Index showed the slowest rate of increase on record, at 0.2%. This figure is a bit of a shock, since it is not what is expected in a gradually tightening labor market. The central question is whether this sharp decline in wages and salaries will trigger alarm bells at the Fed, causing a delay for the first rate hike.

The Conference Board’s Consumer Confidence Index fell 8.9 points in July, to 90.9, the lowest reading since September of last year. Volatility in equity markets and financial issues in China and Europe were behind the decline. The University of Michigan’s Consumer Sentiment Index fell 3.0 points, to 93.1, the lowest level since November 2014.

The Federal Open Market Committee did not change its target federal funds rate at its July 29 meeting. The committee’s assessment of the economy was more upbeat. Notably missing, however, was a clear signal of the intent to raise the funds rate target at the next meeting in September.

Next week brings the employment report. Total payroll gains should tally 200,000 for July, while the unemployment rate rises to 5.4%. Both personal consumption and personal income likely rose 0.2% in June. The trade deficit likely widened, to $44.0 billion, as goods exports fell modestly while goods imports increased. Construction spending likely increased by 1.0%, with gains in both private and public construction spending.

Monday, 3 Aug. – Personal income and consumption (Jun.)

Personal consumption, nominal

IHS Global Insight: 0.2%                   Consensus: 0.2%                     Last actual: 0.9% (May)

Personal consumption, real

IHS Global Insight: -0.1%                                                                  Last actual: 0.6% (May)

Personal income

IHS Global Insight: 0.2%                   Consensus: 0.4%                     Last actual: 0.5% (May)

Core PCE inflation

IHS Global Insight: 0.1%                   Consensus: 0.2%                     Last actual: 0.1% (May)

Implications

Consumer spending likely increased 0.2% in June. Personal income is expected to have grown at the same pace as spending. Inflation-adjusted spending is likely to have fallen by 0.1%. Core PCE prices probably rose by 0.1%, keeping the core year-on-year inflation rate at 1.2%.

Monday, 3 Aug. – Construction spending (Jun.)

Construction put-in-place

IHS Global Insight: 1.0%                   Consensus: 0.7%                     Last actual: 0.8% (May)

Construction excl. residential improvements

IHS Global Insight: 1.0%                                                                   Last actual: 0.8% (May)

Implications

Construction spending is expected to have risen 1.0% in June on increases in both private and public construction.

Monday, 3 Aug. – ISM Manufacturing Index (Jul.)

IHS Global Insight: 53.0                    Consensus: 53.5                      Last actual: 53.5 (Jun.)

Implications

The ISM Index for manufacturing should cool by one-half a point. As the newly revised industrial production readings confirm, the decline in net exports is holding back goods manufacturing.

Wednesday, 5 Aug. – Trade balance (Jun.)

IHS Global Insight: -$44.0 billion                    Consensus: -$42.50 billion                  Last actual: -$41.9 billion (May)

Implications

The trade balance is expected to widen on a small drop in goods exports and an increase in goods imports.

Friday, 7 Aug. – Employment report (Jul.)

Nonfarm payrolls, change

IHS Global Insight: 200,000              Consensus: 225,000                Last actual: 223,000 (Jun.)

Unemployment rate

IHS Global Insight: 5.4%                   Consensus: 5.3%                     Last actual: 5.3% (Jun.)

Average hourly earnings

IHS Global Insight: 0.2%                   Consensus: 0.2%                     Last actual: 0.0% (Jun.)

Implications

The US economy is expected to add 200,000 jobs in July. Gains will likely be concentrated in healthcare, food services, and professional and business services. The unemployment rate should drift higher as the labor force increases.

by Patrick Newport and Manoo Sabety-Javid

ABC Reports: Nonresidential Construction Spending Retains Momentum

CEU2“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002.” —ABC Chief Economist Anirban Basu.

Spending 8.3.15Nonresidential construction spending was unchanged on a month-over-month basis in June, but is up 11.5 percent on a year-over-year basis, according to a report released Aug. 3 by the U.S. Census Bureau. Nonresidential construction spending totaled $686.9 billion on a seasonally adjusted, annualized basis for the month and increased 9.8 percent during the year’s first half.

“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002 and serves as further proof of the recovery for nonresidential construction,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Despite the lack of growth on a monthly basis in June, along with the overall economy’s lukewarm growth, most contractors are markedly busier than they were a year ago. May’s nonresidential construction figure was revised upward by 2.6 percent and April’s by 1.4 percent; therefore, it is conceivable that June’s estimate will eventually be revised higher as well.

“Exactly half of the 16 nonresidential construction sectors experienced growth in June,” said Basu. “On a yearly basis, 15 of those 16 sectors have expanded. However, the one sector that failed to grow during the past year, power, happens to be the largest. Had power simply remained unchanged during hat time period—it’s down 16.5 percent largely because of the fall in oil prices—nonresidential construction spending would currently stand at its highest level ever.”

Eight of 16 nonresidential construction sectors experienced spending increases in June on a monthly basis:

  • Lodging-related construction spending was up 3.9 percent on a monthly basis and 42.2 percent on a year-over-year basis.
  • Spending in the water supply category expanded 12.2 percent from May and is up 12 percent on an annual basis.
  • Highway and street-related construction spending expanded 1.3 percent in June and is up 14.8 percent compared to the same time last year.
  • Amusement and recreation-related construction spending was up 10.2 percent on a monthly basis and is up 39.2 percent from the same time last year.
  • Communication-related construction spending fell 6.8 percent for the month, but is up 13.4 percent compared to June 2014.
  • Construction spending in the transportation category grew 2.3 percent on a monthly basis and has expanded 9.6 percent on an annual basis.
  • Sewage and waste disposal-related construction spending increased 1.6 percent for the month and has expanded 5.3 percent on a 12-month basis.
  • Public safety-related construction spending grew 2.5 percent on a monthly basis, but is down 3.1 percent on a year-over-year basis.

Spending in eight nonresidential construction subsectors fell in June on a monthly basis:

  • Education-related construction spending fell 0.2 percent for the month, but is up 2.1 percent on a year-over-year basis.
  • Power-related construction spending fell 0.9 percent for the month and has declined 16.5 percent from June 2014, the steepest decline for any nonresidential category.
  • Commercial construction spending fell 4.3 percent in June, but is up 7.6 percent on a year-over-year basis.
  • Health care-related construction spending fell 0.9 percent for the month, but is up 6.3 percent on a year-over-year basis.
  • Manufacturing-related construction spending fell 0.8 percent in June, but is up 62.1 percent compared to June 2014.
  • Office-related construction spending fell 1.1 percent in June, but is up 24.4 percent from the same time one year ago.
  • Conservation and development-related construction spending fell 5.8 percent for the month, but is up 6.5 percent on a yearly basis.
  • Religious spending fell 6.2 percent for the month, but is up 5 percent from the same time last year.

To view the previous spending report, click here.

Wells Fargo Reports: Private Sector Compensation Costs Slow Sharply in Q2

Wells_Fargo_Securities_logoCompensation costs slowed markedly in Q2, increasing just 0.2 percent. Weakness appears concentrated among incentive paid workers, but still may raise doubts among the FOMC as to the strength of wage growth.

Better than the Headline Indicates but Still Not Great

Employment costs rose far short of expectations in Q2, increasing just 0.2 percent. The closely watched wages & salaries component rose by the smallest amount since 1982, up only 0.2 percent. The slowdown was concentrated among sales occupations, which are more likely to receive incentive compensation. Ex-incentive paid workers, wage growth continues to show a modest upward trend.

Trend in Wage Growth Remains Disappointing

Compensation costs for government workers picked up in Q2, driven by both wages and benefits. In contrast, private sector benefits fell for the second time since the series began in 2001.

The slowdown in ECI wage growth, along with no clear pickup in the average hourly earnings series of the payroll report may lead the FOMC to reevaluate how much slack remains in the labor market and how fast inflation will return to target.

Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2