Steve Hayward and Charles Hugh Smith have recently pointed to falling gasoline consumption, based on these EIA data that show a steep drop in retail gasoline sales in November and December. Some are saying that this drop in gas consumption signals a decline in economic activity with the possibility that we're headed towards a sharp contraction and double-dip recession.
But the recent Federal Highway Administration report on monthly traffic volume is telling a much different story of fairly large increases in monthly vehicle miles for the months of December (1.3%) and January (1.6%) compared to their year-ago levels (see chart above). The 1.6% increase in January to 224.8 billion vehicle-miles from 221.3 billion a year ago is the largest monthly increase since October 2010. Further, the moving 12-month total of vehicle travel increased in both December and January, following 9 straight months of decline.
I'm not sure how to reconcile these two completely different stories of falling gas consumption but rising travel volume - how can that happen? Perhaps the January gasoline consumption data (not yet available) will show a rise?