Ceridian Fuel Index Suggests "Recovery in Home Building has Not Yet Taken Hold"
The Ceridian-UCLA Pulse of Commerce Index®, a real-time measure of truck fuel usage, is up this month but down in its most recent three month period according to the March Pulse of Commerce Report.
The Ceridian-UCLA Pulse of Commerce Index® (PCI®), issued today by the UCLA Anderson School of Management and Ceridian Corporation, rose 0.7 percent in February but was not enough to offset the 1.7 percent decline in the previous month. The most recent three-month period from December to February is lower than the previous three months from September to November 2011 by 3.2 percent at an annualized rate.
With the first two months of the quarter known, the PCI must grow by over 4 percent from February to March to allow the PCI to grow positively in the first quarter of 2012 compared with the last quarter of 2011. “The continuing weakness of the PCI is signaling that, perhaps, the recovery in home building has not yet taken hold. The recent improvement in building permits and housing starts may get building going again and therefore, trucking as well, as it has been said that it takes 17 truckloads to build a home. If we get the saws and hammers going again, we will have a real recovery with much healthier job growth,” said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and Director of the UCLA Anderson Forecast.Ceridian Truck Usage vs. All Petroleum Usage
Regular Mish readers are not surprised by this report as gasoline and petroleum demand have collapsed. On March 10, I noted Another Plunge in 3-Month Rolling Average of Petroleum and Gasoline Usage.
The following chart shows U.S. petroleum and gasoline usage for December-February compared with the same three months in prior years. Chart is courtesy of reader Tim Wallace.
Note that petroleum usage is back to December 1995 thru February 1996 levels. Gasoline usage is back to December 2001 thru February 2002 levels.
click on chart for sharper image
Ceridian Index vs. GDP
To help explain this apparent anomaly, note that government spending, no matter how useless, is a direct add to GDP. For example, the more food stamps the government hands out and the more bombs the US drops in Afghanistan, the higher the GDP.
Deficit spending is out of control, and by definition, that adds to GDP.
With trillion dollar deficits coupled with easy money from the Fed and central bankers globally, the best we can say is GDP is hovering at stall speed while those on fixed income are clobbered by rising fuel and food prices.
This mirage won't last. I expect "real" (inflation-adjusted) GDP to take a nose-dive shortly unless home-building picks up sharply.
Mike "Mish" Shedlock
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