Click to enlarge.
The black line (left scale) shows the fed funds rate.
The blue line (right scale) shows the 12-month moving total of vehicle miles traveled.
Maybe we'll make it through the ceiling (seen in purple) this time. Maybe we won't. In any event, it is a long climb back to 2007.
Correlation does not prove causation, and that is certainly not what I'm trying to do here. I just find it interesting. That's all. Further, I think it is open for debate on which way the actual causation would be.
Has ZIRP caused oil prices to rise and therefore vehicle miles to stagnate? Or have struggling vehicle miles been a sign of a struggling economy and hence the Fed's desire to continue ZIRP? Or perhaps both working in combination?
For what it is worth, even if vehicle miles traveled do rise to 2007 levels at some point in the not too distant future, I would not expect to see the fed funds rate necessarily follow suit. This chart does not extrapolate backwards in time all that well. Over the long-term (until recently), vehicle miles traveled have been growing exponentially. The same cannot be said of the fed funds rate (which has generally been in decline for 30+ years).
Source Data:
St. Louis Fed: Custom Chart
$4 gas is something of a wall apparently.
ReplyDeletehttp://research.stlouisfed.org/fred2/series/GASDESW
RVs were supposed to be the big thing for boomers to buy in bulk, but boomer remember filling up for a $5 so the $100+ it costs to fill up an RV can be tough.
Troy,
ReplyDeleteWe thought about getting something like this just over a decade ago, but that was before I started an illusion of prosperity blog. Sigh.
How is this for a timely cross post?
ReplyDeleteUS Gasoline Retail Sales Since the Financial Crisis
Mr Slippery,
ReplyDeleteFrom your link:
Another glorious victory for The Recovery™.
Hahaha! Sigh.
This comment has been removed by the author.
ReplyDeleteI'm doing my part.
ReplyDeleteMade a 2000 mile car trip in the last week.
And I'm fucking exhausted.
[no pun intended]
JzB
http://research.stlouisfed.org/fred2/graph/?g=ulX
ReplyDeleteblue is gas retail sales
red is driving population (right axis)
sales numbers are weird since per-household gasoline is $3000
http://www.eia.gov/todayinenergy/detail.cfm?id=9831
an order of magnitude bigger than $50B in the aggregate.
Still, 4% of income to move around this wonderful planet is not too big a burden, compared to the 15% it costs to remain in place!
http://research.stlouisfed.org/fred2/graph/?g=um0
(it's my thesis that if gas rises to 10% of gross incomes, housing "has" to fall concomitantly)
oh, wait, lemme guess, 'retail trade' means junk food bought from gas stations.
ReplyDelete:head desk:
and, yeah, if gas doubles, junk food sales from gas stations is going to disappear before rents fall.
ReplyDeletethe majors are already having this problem, gas costs sucking money out of consumers' pockets.
friend of the family had their own Kwik-E-Stop in rural Minnesota. Good location, but gas going from $1 to $3 BK'd them pretty quick.
1980-1999 households spent ~$20/week on gas.
ReplyDeleteit was an innocent time, until we gave China our moneyz and they starting buying and burning "our" oil with it.
Jazzbumpa,
ReplyDeleteWow! You were like 52 of me! Takes me a full year to drive 2000 miles! No joke.
Troy,
ReplyDeletefriend of the family had their own Kwik-E-Stop in rural Minnesota. Good location, but gas going from $1 to $3 BK'd them pretty quick.
Ouch.