The Nation’s transportation system makes possible the efficient movement of both people and goods throughout the country and internationally. As discussed in chapter 1, transportation assets, totaling $7.7 trillion in 2012, are a major underpinning of the Nation’s wealth and prosperity. Besides facilitating activity in all segments of the economy, the for-hire transportation sector (services for which one pays a fee or buys a ticket) directly employs over 4.4 million people (in 2012), generates revenues through taxes and user fees through their payments for fuel, and invests in infrastructure and equipment needed to move people and goods. Beyond its contribution toward the development of the U.S. gross domestic product (GDP), transportation is also an important element in both household and government budgets. The average household spends about $9,000 per year on transportation, while the government spends about $800 per capita on transportation expenditures.

Transportation and U.S. Gross Domestic Product

Transportation is both a part of the economic output of the economy and a contributor to that economic output. The Nation’s economic output, measured as U.S. GDP by the Bureau of Economic Analysis, included nearly $1.3 trillion in personal consumption, private domestic investment, government purchases, and exports related to transportation goods and services in 2012 (measured in chained 2009 dollars). After subtracting $394 billion in transportation- related imports, transportation accounted for 8.6 percent of U.S. GDP (table 6-1).

When the effects of inflation are removed, spending on transportation in 2012 as a part of final demand has almost fully recovered from the economic recession, which began in December 2007 and continued through June 2009 [NBER 2013]. Many of these changes are due to personal consumption of transportation and private domestic investment in transportation equipment, both of which suffered significant declines during the recent recession. While personal consumption has not completely rebounded, private domestic investment has nearly doubled since bottoming out in 2009 (table 6-1).

Transportation is also a contributor to economic output, making possible the production and sale of nearly everything made in the Nation. For-hire transportation contributes $472 billion (3.0 percent) to U.S. GDP when the goods and services consumed by for-hire transportation are netted out to avoid double counting. Of this contribution, 26.7 percent is made by for-hire trucking, with the next largest modal share (16.5 percent) coming from commercial aviation (figure 6-1).

Many nontransportation industries provide transportation services for their own use, called in-house transportation (e.g., trucks operated by grocery chains). The contribution of in-house transportation services to the economy had not been separately broken out until the Transportation Satellite Accounts were developed jointly by the Bureau of Transportation Statistics (BTS) and the Bureau of Economic Analysis (BEA) in 1997. In 2006, the latest year for which estimates are available, in-house transportation accounted for nearly half (45 percent) of the total value added by both for-hire and in-house transportation services in the trucking, rail, water, and air modes to the U.S. economy [USDOT BTS 2011]. Applying this ratio to 2012 data, the total value of in-house plus for-hire transportation for all modes is estimated at $588 billion for 2012, compared to $514 billion for 2006.

Transportation and Trade

An efficient and reliable domestic transportation system with good connections to the international transportation network allows U.S. businesses to compete for customers in the global marketplace and to connect domestic manufacturers with distant sources of raw materials and other inputs to produce goods.

The transportation industry moves trade goods and provides international transportation services. U.S.-international trade grew faster than the economy as a whole. Between 2000 and 2010, the real value of U.S- international trade increased by 47.1 percent and GDP increased by 22.4 percent, while at the same time the real value of household income decreased by 8.9 percent. As a share of GDP, U.S. merchandise trade in terms of current dollars, which includes goods but not services, grew from about 19.6 percent in 2000 to 23.9 percent in 2012 [USDOC BEA NIPA 2014, USDOC CENSUS 2012, FTD 2013 and Annual Issues]. Canada, China, and Mexico are the top trading partners in merchandise trade for the United States, as discussed in chapter 4.

The growth in international trade is driven, in large part, by U.S. demand for imported goods. Since the 1970s, the United States has annually imported more goods than it has exported. In 2012 the goods deficit was $741 billion, while services had a surplus of $204 billion, which was the highest on record [USDOC CENSUS FTD 2014]. In 2012 the U.S. imported $415 billion worth of petroleum products compared to only $124 billion in U.S. exports. Also the imports of automobiles ($282 billion) outpaced automobile exports ($141 billion) in 2012 [USDOC CENSUS FTD Annual Issues].

Transportation-Related Employment and Productivity

Beyond the direct and indirect value provided by the transportation sector, it is a significant employer in the United States. In 2012 about 4.4 million people worked in for-hire transportation and warehousing, with trucking accounting for 30.6 percent of that total (table 6-2). The total transportation-related labor force decreased 15.6 percent between 2000 and 2012 [USDOL BLS CES 2014]. The employment decline in the air and truck transportation industries is due partly to productivity improvements (figure 6-2). Mergers and discontinuance of unprofitable routes and services contributed to the airline industry’s productivity improvement.

Employment in transportation is not limited to transportation service providers and warehousing. Millions more work in vehicle sales and repairs, vehicle and equipment manufacturing, and a host of other businesses with transportation-related functions [USDOL BLS OES 2014]. Including jobs from these various industries, transportation-related employment accounted for about 8.8 percent of the U.S. labor force in 2012, down from 10.5 percent in 2000 (see table 6-2).

Workers in transportation occupations are also found in other industries. In 2012 there were approximately 2.9 million people employed as truck drivers in the United States, many of them working for companies whose business focus is nontransportation related, but nevertheless rely on transportation to function, such as grocery chains with in-house truck fleets (table 6-3).

Productivity, measured by output per hour worked, is an important indicator of economic growth and health. Improvements in productivity helps the United States maintain its international competitiveness despite high wages, fuel costs, and other transportation expenditures. Although labor productivity for the transportation sector as a whole is not available, the Bureau of Labor Statistics (BLS) reports labor productivity for several for-hire transportation industries: air, line-haul railroads, general (long distance) freight trucking, and postal services (figure 6-2). Air transportation and line-haul railroads increased productivity by 82.7 and 29.6 percent, respectively, between 2000 and 2012 through divestiture of unprofitable lines and other efficiency improvements. Air carriers improved productivity, as measured by the number of available seat-miles flown per gallon of fuel, and fuel efficiency, as measured by the number of gallons consumed per block hour [USDOT BTS 2012b]. Over the same period, postal service productivity improved by 3.7 percent and general freight trucking by 13.2 percent. The relatively low increase for freight trucking may be due to increasing quality-of-service demands by shippers and the public. In comparison, overall business sector productivity increased by 30.5 percent [USDOL BLS LPC 2014].

Household Expenditures on Transportation

In 2012 the average household expenditure on transportation was nearly $9,000. This translates to almost 17.5 percent of average household expenditures, second only to housing—about $17,000 per year (figure 6-3). The majority of household transportation expenditures went to the purchase and upkeep of vehicles (94.0 percent), including the cost of gasoline. Some portion of these expenditures represents consumer costs that could be avoided if there were reductions in congestion. Spending on all modes of for- hire and public transportation accounted for the remaining 6.0 percent of household transportation spending in 2012. Airline fares were the largest purchased transportation expenditure (among those who fly), followed by mass transit, a distant second [USDOT BTS NTS 2014]. However, only about one-third of all individuals fly in a one-year period.

On average, rural households spent more on transportation ($9,775) than urban households ($8,804) in 2012. This difference is mostly driven by greater expenditures on motor vehicles and gasoline in rural areas. Gasoline and motor oil expenditures were 29.1 percent higher for rural households. Urban households spent about twice as much on public transportation as did their rural counterparts [USDOL BLS CEX 2014].

In 2011 the Bureau of Labor Statistics’ Consumer Expenditure Survey estimated that transportation expenditures accounted for 44.0 percent (about $603) of the $1,372 in total annual consumer expenditures on travel for pleasure. These transportation expenditures show the effect of the economic recession ($538 in 2005, $643 in 2007, $543 in 2009) and subsequent recovery (rising to $570 in 2010 and to $603 in 2011). Airfares accounted for 24.9 percent and “other transportation,” including recreational vehicles, accounted for 19.1 percent. Pleasure-related transportation expenditures (excluding business-related travel) included an average of $342 on airfares; $62 on bus, train, and ship fares; $141 on gasoline and motor oil; and $23 for car and truck rental in 2011 [PAULIN 2012].

After generally holding steady in the late 1990s, the annual average prices of gasoline and diesel increased 133.5 and 163.0 percent, respectively, since 2000. As shown in figure 6-4, prices increased from $1.30/gallon for regular gasoline in January 2000 to a monthly average price of $3.70/gallon in 2012 [USDOE EIA 2014].

At the national level, the Bureau of Labor Statistics estimates a consumer price index for urban consumers (CPI-U) that represents the average change in the price of a bundle of market goods at any particular point in time. Transportation costs are part of the CPI-U calculation and represent the second most important contributor after housing costs. Since 2001 the CPI-U has steadily increased with transportation costs ranging from 15.3 to 17.7 percent of the CPI-U.  Contrary to the decade-long upward trend, a large reduction in this percentage occurred from late 2007 to early 2008 as the economic recession was first beginning. Fuel prices fluctuated dramatically during this period, first surging to new price levels and later plummeting as the demand for fuel decreased. [USDOL BLS CPI 2012].

Annual average transportation prices have increased more than the 33.3 percent increase in the Consumer Price Index (CPI) between 2000 and 2012. According to the CPI, total transportation prices¹ grew by 41.8 percent during this period. However, new and used motor vehicles prices have been flat. As components of owning a car, automobile insurance increased 56.8 percent, maintenance costs increased 45.3 percent, and the cost of parts increase 46.4 percent between 2000 and 2012. In addition, the CPI shows the costs of public transportation were below the overall price increase, given that public transportation costs increased 29.5 percent during the 2000- 2012 period [USDOL BLS CPI 2014].²

Public- and Private-Sector Expenditures on Transportation

Federal, state, and local governments spent approximately 4 percent ($243 billion) of their expenditures on transportation in 2009, according to the Government Transportation Financial Statistics 2012 report produced by BTS. The same report calculates per capita government spending on transportation at about $800 per year [USDOT BTS 2012a]. These expenditures are used, among other things, to build, operate, and maintain publicly owned transportation facilities, implement public policy in such areas as safety and security, and undertake many other activities.

In 2009, the latest year for which comprehensive data have been published, governments spent $243 billion on transportation, with state and local governments spending 82.4 percent of that total, including Federal grants (table 6-4). Government transportation expenditures increased by 69.6 percent between 1995 and 2009. Nearly 50.8 percent of government expenditures went to highways, followed by transit (22.4 percent), air (19.7 percent), and water (5.7 percent).

The public sector is the major funding source for transportation infrastructure construction in the United States. In 2012 the value of government- funded construction underway was about $107 billion, which accounted for 90.0 percent of the total spending. That year government spending on transportation construction was slightly down from a peak of $110 billion in 2010, but up 2.4 percent from 2011. Approximately three-fourths of this public investment was for highways;³ the remainder supported such construction as airport terminals and runways, transit facilities, water transportation facilities, and pedestrian and bicycling infrastructure [USDOC CENSUS 2012b].

The private sector increased spending on transportation construction by 19.2 percent from 2011 to 2012. In 2012 the value put in place by private construction was $11 billion. The majority of this outlay was for rail projects, followed by air transportation. In total, the public and private sectors spent $119 billion on transportation construction in 2012 [USDOC CENSUS 2012b].

Public-Sector Revenues From Transportation

Public dollars spent on transportation come from user taxes and fees, such as gasoline taxes and tolls, air ticket taxes and fees, and general revenues. In 2009, the latest year for which data from all levels of government have been assembled, government transportation revenues from all sources totaled $156 billion (current dollars). State and local governments collected 67.9 percent of all transportation- related revenues, while the Federal Government collected the balance. As shown in table 6-5, the highway sector generated the greatest revenues (mainly from gas taxes), accounting for $104 billion (67.0 percent), followed by air, a distant second at $30 billion (mainly from air ticket taxes and fees).

Total transportation revenues increased (without adjusting for inflation) by about 66.2 percent, from $94 billion in 1995 to $156 billion in 2009, while government transportation expenditures increased from $143 billion in 1995 to $243 billion in 2009. Over the same period, highway revenues rose by 56.5 percent. In 2009 transportation revenues covered only about 64.1 percent of expenditures. When revenues from transportation user taxes and fees do not cover expenditures, general tax receipts (e.g., from sales and property taxes), trust fund balances, and borrowing are needed to cover shortages. This gap between transportation expenditures and revenues has widened from $49.6 billion in 1995 to $87.2 billion in 2009.

References

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Paulin, Geoffrey (PAULIN); Travel expenditures, 2005–2011: Spending Slows during Recent Recession (December 2012), U.S. Bureau of Labor Statistics, Beyond the Numbers: Prices & Spending, vol. 1, no. 20, http://www.bls.gov/ as of June 2014.

U.S. Department of Commerce (USDOC), Bureau of Economic Analysis (BEA). National Income and Product Accounts (NIPA). Table 1.1.6. Real Gross Domestic Product, Chained Dollars, Interactive, Annual. Available at http:// www.bea.gov/itable/ as of August 2014.

U.S. Department of Commerce (USDOC), Census Bureau (CENSUS):

—2012a. Historical Income Table H-6. Available at http://www.census.gov/ as of August 2014.

—2012. Value of Construction Put in Place, Not Seasonally Adjusted (2002-2012), available at http://www.census.gov/ as of February 2014.

U.S. Department of Commerce (USDOC), Census Bureau (CENSUS). Foreign Trade Division (FTD):

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—2014. U.S. Trade in Goods and Services - Balance of Payments (BOP) Basis (June 4, 2014). Available at http://www.census.gov/ as of August 2014.

U.S. Department of Energy (USDOE), Energy Information Administration (EIA). Monthly Energy Review (July 2014). Table 9.4 Retail Motor Gasoline and On-Highway Diesel Fuel Prices. Interactive, Annual. Available at http:// www.eia.gov/ as of August 2014.

U.S. Department of Labor (USDOL), Bureau of Labor Statistics (BLS):

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—2012b: BTS Special Report: A Decade of Change in Fuel Prices and U.S. Domestic Passenger Aviation Operations (March 2012). Available at http://www.bts.gov as of August 2014.

—2014. National Transportation Statistics (NTS). Available at http://www.bts.gov/ as of October 2014.

¹ Transportation price is less motor fuel.

² Public transportation costs include fares for airlines, in- tercity bus, intercity train, ship, and intracity transporta- tion (intracity mass transit) in the Consumer Price Index.

³ Includes pavement, lighting, retaining walls, tunnels, bridges, toll/weight stations, maintenance facilities, and rest stops.