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Research Facts & Figures
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Economic Forecasts & Updates
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April 2010 Quarterly Forecast
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Trade & Manufacturing
TRADE & MANUFACTURING: CONTINUED SIGNS OF GROWTH
The most encouraging sign for future job growth in the Bay Area comes from international trade. As the recovery shapes up it appears that growth by the Bay Area’s trading partners coupled with a weaker dollar has generated increased demand for California’s natural resources and manufactured goods.
The growth of exports through California’s seaports has been relatively steady since the trough in the 1st quarter of 2009. The Port of Oakland, which is a conduit for exports of raw and processed food, raw materials, and forest products from the Central Valley and North Coast, and machinery from Bay Area factories, has seen a steady rise of traffic and has returned to pre-recession levels of activity.
California’s high value goods typically travel by air cargo. The split between the two Bay Area airports with substantial air cargo traffic, SFO and OAK, relates to both location and destination. SFO is the principal port of embarkation for international exports, while SFO and OAK share in the domestic air cargo traffic. SFO exports are also now back to near pre-recession levels . This indicates a demand for manufactured goods which is at least in part, reflected in the gain in non-durable goods manufacturing in the East Bay.
At OAK no such gain in traffic is being observed . February 2010 cargo traffic was below that of the previous recession wracked February 2009. Since domestic traffic is dominated by small package delivery services, the fall off in traffic from consumer purchases appears to have swamped any increase that might have obtained from the new orders for durable goods reported in the national statistics . But overall export growth bodes well for these sectors as they end up as the leading sectors in the early part of the recovery.
THE CERIDIAN-UCLA PULSE OF COMMERCE More telling are the results from a new index from the UCLA Anderson Forecast. The UCLA Anderson Forecast is partnering with Ceridian Corporation to bring to market an exciting new index for tracking and forecasting the US economy . The Ceridian-UCLA Pulse of Commerce Index (PCI) is a series of indexes which are national, regional and sub-regional in scope. The data underling the Ceridian-UCLA Pulse of Commerce Index come from credit-card swipes for the purchase of diesel fuel at over 7,000 truck stops all over the country. The interstates that crisscross America are the arteries along which products flow that are the lifeblood of the economy. If the goods do not move, the economy turns comatose. Rather than measuring the pulse at a couple of locations, like the wrist and the neck, Ceridian has in effect, installed sensors at truck stops all over the United States that measure the flow through this arterial system.
Less than a second after a credit card is swiped at a truck stop to authorize the purchase of diesel fuel, the transaction is recorded on Ceridian’s computers in Nashville, Tennessee. Most of the other data that we rely on to track the economy are based on after-the-fact surveys filled out by individuals whose memories may have dimmed and who have mixed incentives to provide accurate information. The Pulse of Commerce Index is based on real transactions, observed instantaneously, with rich geographic detail.
By tracking the volume and location of fuel being purchased, the Pulse of Commerce 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. Working with economists at the UCLA Anderson School of Management and Charles River Associates, Ceridian releases the index monthly for the nation overall and for the nine Census regions. The geographic detail of the data offers vast possibilities for studying details of local economies.
These data help shed light on the health of regional economies such as the East Bay. The Ceridian-UCLA Pulse of Commerce Indexes are computed for the State of California, for neighboring states and for California counties. Each of these regions includes one or more segments of the arteries of the system. Here we focus on traffic from Sacramento to Salt Lake City, the principal east/west artery for truck traffic to and from the Bay Area. The index clearly tracks the course of the Bay Area economy and has the unique advantage of being a real time indicator. For the past two recessions, the index has trailed the economy turning down only after the recession began. In the last recession the index turned down only when consumer demand weakened in the middle of 2008. After bottoming out in the summer of 2009 the index has grown, but remains well below its previous peak. The latest month’s data still do not indicate any substantial growth in I80 traffic and by implication does not give us a good fix on when demand will be strong enough to generate significant net new jobs in the East Bay. 
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