Relationship between Vehicle Miles Traveled and Economic Activity

Vehicle miles traveled (VMT) in the United States has exhibited an upward trend over time similar to that observed for the gross domestic product (GDP) and personal income. Although conventional wisdom suggests that economic growth leads to more driving and thus higher VMT, it is theoretically possible that the causation could be the other way around. If causation is from VMT to GDP, a directive from legislation such as the Federal Surface Transportation Policy and Planning Act of 2009 to reduce national per capita VMT annually could have an adverse impact on the overall economic activity. This study uses times series techniques to test empirically for Granger causality between VMT and various measures of the national economic activity over time. In most circumstances the causal relationship is found to be from economic activity to VMT; this relationship confirms conventional wisdom and suggests that exogenous shocks to VMT will not negatively affect the national GDP. The relationship between national VMT and GDP is found to be dependent on the stage of the business cycle, in particular, when GDP leads VMT in economic upturns or normal times but VMT tends to lead GDP recessions. For the 98 urban areas included in this study, no significant causal relationship was found between VMT and economic activity in either direction.

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