Personally speaking, one of the silver linings that has emerged in the past few weeks is a rising appreciation of nontraditional market indicators. This started with the daily deluge of statistics pertaining to COVID-19. Now that the economy is starting to reopen, the business media has started to report on a widening variety of indicators.
At the start of the recovery from the recession a decade ago, these early indicators were called "green shoots." This time the catchphrase is "new normal." Annoying catchphrases notwithstanding, getting a different perspective on how this intricate economy functions by exploring unusual trends is an opportunity to learn something new and useful.
For instance, I recently heard that after a precipitous drop in the number of truckloads of commercial rubbish hauled nationwide in April, there was a strong rebound in May. These numbers nicely correspond with the record-breaking recovery that has occurred in the widely followed U.S. stock markets. So, with both stocks and commercial rubbish haulers experiencing a strong, V-shaped recovery, can the rest of the economy be far behind?
I am convinced the worst is now behind us, but it was obvious quite early that the market for plastic automotive parts was hit hard. In keeping with this spirit of nontraditional indicators, I am using two graphs for my analysis and forecast of how I think an early-phase recovery in the automotive industry will unfold this year. Along with a chart of the well-publicized data on light vehicle sales, I am including a graph derived from the monthly data measuring vehicle miles traveled in the U.S.
Unless you are a tire manufacturer, a gasoline refiner or an auto insurance actuary, you probably paid little attention in the past to the data on vehicle miles traveled. You know that traffic gets increasingly worse every year, but you never bothered to quantify it. But then we shut down the economy and roads became eerily deserted.
If this situation were to persist for an extended period, it ultimately would have a significant impact on demand for motor vehicles and plastic automotive parts. With the amount of sitting in rush-hour traffic every day, it is easy to assume that demand for motor vehicles in America will always be strong. But now that many of us have had to work from home and shop online for two months, it occurs to me this data series on miles traveled will become more important in the near future.