One fundamental assumption that underscores modern American culture is that no matter what the circumstances, Americans will take to the road. Yet data on total miles traveled during what is the most unusual economic downturn in over a century presents a different narrative. In fact, we think that this may present an opportunity to reduce pollution and modernize one part of America’s aging infrastructure.
Total vehicle miles traveled in the United States dropped by an unprecedented 10% in the 12 months through August. That drop is magnitudes larger than the decline in miles traveled during the gas shortages that crippled global economies during the 1970s and 80s.
The figure looks at the percentage change of the 12-month moving average of miles traveled – which eliminates both month-to-month variation and long-term growth of population and car use. We should also note that on a monthly basis, miles traveled in individual months during the economic shutdown dropped by as much as 40% relative to the same months in 2019.
During the depths of the economic shutdown and with cars sitting in garages for months on end, not only did the price of gasoline drop noticeably, but there were also second-order effects.
The plunge in pollution during the pandemic suggests an avenue for fostering an economic recovery.
The drop in car usage and gas prices helped to bolster household balance sheets, and the drop in pollution gave the environment some much-needed help. In fact, satellite data from March showed a significant drop in air pollution in Los Angeles and other major cities after the economic shutdown.
In terms of public policy, the remarkable drop in pollution during the pandemic suggests an avenue for fostering a post-pandemic economic recovery, all while taking a big step toward saving the environment.
As an example, consider President Eisenhower’s advocacy of the national highway system as a national defense measure, which led to the creation of interstate highways that transformed the way goods are transported across the country and undeniably continues to create much-needed construction jobs.
The next administration could foster the development and use of electric vehicles by subsidizing recharging stations on those same interstates, which would lead to second-order income effects throughout the economy while reducing respiratory disease.
Recall that General Motors, Ford and other automakers are busy joining Tesla’s manufacture of electric vehicles; helping to increase consumer taste for cleaner transportation would go a long way toward sustaining the U.S. automobile sector. Indeed, we think that this could be one of the core objectives of a policy to modernize America’s outdated national infrastructure.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.