Transportation

Introduction

This paper will discuss in-depth six indicators of the transportation industry, and its affects on the U.S. economy. The indicators are real gross domestic product, transportation services index, consumer price indicator, unemployment rate, producer price index and money supply.

Gross Domestic ProductThe purpose of the Gross Domestic Product (GDP) is to “measure the total production of goods and services produced in the economy each year. This number is important because it gives an indication of how successfully society is addressing the scarcity problem.” (Gross Domestic Product, n.d., para. 1). GDP can be measured by cumulating all spending and all income earned in the economy. Both measures approximately equates to the same total (John, 1999). Real GDP (RGDP) is the total GDP minus the effects of inflation. RGPD allow the comparison of GDP figures and changes from one country to another with the goal of being able to evaluate a country's actually worth (John, 1999).

Transportation in the United States is facilitated by road, air, rail, and water networks. The vast majority of passenger travel occurs by automobile for shorter distances, and airplane for longer distances. In descending order, most cargoes travel by railroad, truck, pipeline, or boat; air shipping is typically used only for perishables and premium express shipments.

Thesis statement: Indicators of the transportation industry reflects a slow down the last two years but the early indicators shows that the steady growth trend in 2008 to be solid.

Importance of an effective transportation system

It is typical in the developing nation that production and consumption that take place in close proximity, much of the labor force is engaged in agricultural production, and a low proportion of the total population lives in urban areas. With the advent of inexpensive and readily available transportation services, the entire structure of the economy changes toward that of developed nations. An efficient and inexpensive transportation system contributes to greater competition in the marketplace, greater economies of scale in production, and reduces prices for goods(www.bts.gov).

Greater competition: with improvements in the transportation system, the landed costs for products in distant markets can be competitive with other products selling in the same markets.

Economies of scale: wider markets can result in lower production cost. Inexpensive transportation also permits decoupling of markets and production sites. This provides a degree of freedom in selecting production sites such that production can be located where is a geographic advantage.

Reduced Prices: inexpensive transportation also contributes to reduced product prices. As transportation becomes more efficient, as well as offering improved performance, society benefits through a higher standard of living.

Discussion

From 1992 to 1996, the trucking industry had been able to keep inline with the real GDP. The trucking industry continued a steady growth but was not able to keep pace the read GDP (US Department of Transportation, 2003).

Transportation Service Index

Transportation services index (TSI) is the main seasonally adjusted economic measure of transportation measured on a monthly basis. Some indicators used to determine the TSI are employment, sales, business inventories, consumer confidence, among other things. The TSI is short ...