Introduction

During the 2001 International Symposium on Forecasting in Atlanta, Peg Young approached me to inquire whether I would be interested in developing an output measure of the transportation sector for the purpose of macroeconomic forecasting. At that time, the Bureau of Transportation Statistics (BTS) of the U.S. Department of Transportation (US DOT) was interested in developing such a project in order for it to join the company of other federal agencies that produce monthly U.S economic indicators. During next two years with a research grant from US DOT at the University of Albany, SUNY, entitled “The Theoretical Development, Selection, and Testing of Economic Indicators for the Transportation Industry,” I developed the transportation services index (TSI) with the assistance of Herman Stekler as the consultant and graduate student Wenxiong Yao as the research assistant of the project. Needless to say, we had to make numerous visits to Washington to consult with DOT staff and for presentations. Identifying monthly indicators for different sectors of the transportation sector was difficult because transportation indicators had virtually disappeared from business cycle research since the early 1950s. The research project was completed in a year and during the summer of 2003. I went to US DOT headquarters in Washington DC with Wenxiong Yao to train its staff to produce the index on a monthly basis. On January 2, 2004, after ringing the opening bell of the New York Stock Exchange, the U.S. Transportation Secretary Norman Mineta announced the roll out of the TSI as a new economic indicator intended to measure the total freight and passenger activity in the U.S. economy. Six weeks later, the first monthly release of the TSI on March 10, 2004, marked the official beginning of the series that has been released and updated every month since then, and all reports are now available at http://www.bts.gov/xml/tsi/src/index.xml. The new indicator did not escape the media attention. On April 5, 2004, issue ofBusiness Week, columnist James Mehring noted, “The index provides another sorely needed measure of the service sector. Services constitute about two-thirds of the economy, yet few government reports cover the…[It] should become a new crystal ball for economists and investors to peer into.” On March 15, 2010, the front page ofWall Street Journalreported the recent upward movement in the freight component of TSI, suggesting that the latest recession might have turned around.