The rumble of diesel engines across America's highways echoes the pulse of the economy – sometimes strong, sometimes faint. Does the path to economic recovery truly mirror these engines, sputtering with uncertainty? The latest Ceridian-UCLA Pulse of Commerce Index (PCI) offers revealing insights.
PCI Index: The Economy's Real-Time Barometer
The Ceridian-UCLA PCI isn't theoretical – it analyzes real-time diesel consumption data from over 7,000 trucking locations nationwide. As a payment processor tracking commercial fuel purchases, Ceridian created this unique economic indicator. Since freight movement correlates closely with industrial production and GDP growth, PCI serves as a crucial economic barometer.
June Data: Glimmer of Hope Amid Concerns
After consecutive declines in April and May, June's PCI rose 1.0% – only the second increase this year following March's 2.7% gain. However, seven of the past twelve months showed declining trends. Annually, June's index grew 2.0% year-over-year compared to May's flat reading, marking the first time in 16 months without annual growth. These figures suggest economic recovery remains uneven and unpredictable.
Forecasting Power: Predicting Industrial Production
Beyond reflecting current conditions, PCI attempts to forecast future trends. June's data predicts 0.17% industrial production growth – a projection that will be tested when the Federal Reserve releases official data on July 15. Ceridian notes PCI forecasts matched government figures in four of the previous five months, demonstrating strong predictive accuracy.
Expert Analysis: The Economy's Mixed Signals
Ed Leamer, chief PCI economist and director of UCLA Anderson Forecast, describes the U.S. economy as being in a " she loves me, she loves me not " pattern. Alternating positive and negative indicators create nervousness among investors and forecasters, with no clear sustainable trend emerging. Leamer observes that both GDP and employment growth have shown inconsistent performance over seven months, failing to drive meaningful recovery or reduce unemployment.
Growth Fragility: Another False Start?
While June's 1.0% PCI increase appears positive, Leamer remains cautious. After numerous " false starts " throughout the year, economic growth still faces significant uncertainty. Stagnant retail sales, continued housing market weakness, and elevated gasoline prices (despite recent declines, still about $1 higher than last year) all indicate ongoing recovery challenges.
Corporate Perspective: A Rocky Economic Journey
Ceridian Senior Vice President Todd Dooley acknowledges June's improvement but emphasizes PCI's volatility continues. " The economy remains a very bumpy ride ," he stated. "We maintain our GDP growth estimate between 1.5% and 2%. Until more Americans return to work, unemployment won't improve substantially, meaning this stop-start economic pattern will persist."
Second-Half Outlook: Easier Yearly Comparisons
Dooley highlights one positive factor: since PCI declined during 2010's second half (while first-half growth came from inventory rebuilding), year-over-year comparisons will become more favorable. If June's level holds, second-half growth becomes achievable – offering cautious optimism for economic recovery.
Understanding the PCI Methodology
This innovative index tracks diesel purchases at over 7,000 locations through Ceridian's payment network. The rationale? Diesel fuels commercial transportation, which directly reflects business activity levels. When goods move, the economy grows – making diesel consumption an ideal economic proxy.
Strengths and Limitations
PCI's greatest advantage is real-time data availability , unlike lagging indicators like GDP. Its predictive capability also sets it apart from traditional metrics. However, as a single indicator, PCI shouldn't be viewed in isolation. Fuel price fluctuations, transportation efficiency changes, and seasonal patterns can all influence results.
Conclusion: Cautious Optimism Required
The Ceridian-UCLA PCI provides unique visibility into America's economic engine. While June's uptick suggests potential momentum, the index's year-long volatility reminds us that recovery remains fragile. Analysts must weigh PCI data alongside other indicators while recognizing that sustainable growth requires time and broader employment gains. The road ahead may be uneven, but understanding these economic signals helps navigate the journey toward recovery.