Traffic Indicates the U.S. Economy Continues to Expand Amidst Taper Talk

Economists, businesses and the American public have all been watching the U.S. Federal Reserve very closely in recent months for any indication of when it might begin to remove the unprecedented support it has provided the U.S. economy since the start of the financial crisis. Increased traffic levels in recent months indicate that while the time for such action might be near, the Fed will have to walk a very fine line as it considers tapping on the brakes.

Data from the latest INRIX Gridlock Index (IGI) showed that for drivers across the country, in July the average trip took just over seven percent longer due to increased traffic congestion on a year-over-year basis. The U.S. economy has certainly improved since July 2012’s plunge of 26 percent in traffic congestion, although traffic levels have increased at a moderately slower pace in each of the past three months.

It remains to be seen what action the Fed will take, and over what time horizon, but the Fed’s action is likely to have implications for what your commute will look like in the near future. While any move by the Fed to scale back the stimulus it has been providing will indicate a vote of confidence in the strength of the U.S. economy, such action could lead to a moderate slowdown in economic growth and a shorter commute for many Americas in the short term. But don’t get too excited about the prospect of a shorter commute – if the Fed believes the economy is truly on a stronger footing, any short-term economic slowdown and decrease in traffic congestion could quickly be surpassed by sustained economic growth and higher sustained levels of traffic congestion. Time will tell.

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