The most recent Ceridian-UCLA Pulse of Commerce IndexTM is out and the news is not good. The PCI declined 1.4% in August -- a large decline -- and comes after the July index that was down 0.2%. The Ceridian-UCLA Pulse of Commerce IndexTM "is based on real-time fuel consumption data for over the road trucking and serves as an indicator of the current state and possible future direction of the U.S. economy. By tracking the volume and location of diesel fuel being purchased, the index closely monitors the over the road movement of produce, raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers."
Here is the latest Ceridan-UCLA Pulse of Commerce IndexTM video, featuring UCLA Anderson Forecast Director Ed Leamer, who is also the chief economist for the PCI:
We had a chance to interview Leamer yesterday and we asked him to share with us his thoughts on what the PCI was telling him about the rest of the year. We didn't mention "the R Word" but ... well ... here is what he said:
"We're very concerned about what comes next the rest of the year. The summer has come with great concern about economic growth and prospects in the labor market. People are thinking about another dip, with an actual decline in GDP and rise in unemployment.
"The index is extremely weak in August, down 1.4% after being down in July. The index is saying this economy is troubled. But how do you interpret that?
"One way is the Wall Street approach -- 'Omigod, the recession is coming. The second way is the UCLA way. Our way is to look back carefully at the history and see if similar circumstances have let to recessions.
"The answer is, the Pulse of Commerce Index had problems in 2003, after the 2001 recession. Trucking was also weak in 2007 and that led to the horrible recession of 2008. So, is 2011 like '07 or '03? Our position is that it's like 2003. 2007 had a great imbalance in the housing sector after decades of excess spending. 2003 was just the beginning of an expansion and the hope is that 2011 is the beginning of a long expansion. We believe circumstances are more like 2003 than 2007."
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