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Chapter 4 - Transportation and the Economy

  • Personal, business, and government purchases of transportation goods and services account for nearly 8.7 percent of U.S. Gross Domestic Product.
  • Transportation and related sectors employed over 11 million workers in 2011, representing nearly 8.7 percent of the Nation's labor force.
  • American households spend, on average, over $8,000 per year on transportation, representing nearly 16.7 percent of household expenditures. Transportation expenditure is the second largest household spending category, next to housing.
  • The transportation revenues of Federal, state and local governments totaled $156 billion in 2009, while government transportation expenditures totaled $243 billion – a deficit of $87 billion, up from $50 billion in 1995.

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 trillion in 2010, are a major underpinning of our Nation's wealth and our prosperity. Besides facilitating activity in all segments of the economy, the for-hire transportation sector directly employs over 4 million people, generates revenues through taxes and user fees, and invests in infrastructure and equipment needed to move people and goods. Beyond its contribution toward development of the Nation's gross domestic product (GDP), transportation is also an important element in both household and government budgets. The average household spends nearly $8,000 per year on transportation, while the public sector 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 GDP, included near $1.5 trillion in personal consumption, private domestic investment, government purchases, and exports related to transportation goods and services in 2011 (measured in 2005 chained dollars). After subtracting $334 billion in transportation-related imports, transportation accounted for 8.7 percent of U.S. GDP (table 4-1).

When the effects of inflation are removed, spending on transportation in 2011 as a part of final demand is up 16.9 percent from 1995 but down 4.1 percent since 2000. Many of these changes are due to personal consumption of transportation and private domestic investment in transportation equipment, both of which were growing through the 1990s but suffered significant declines during the recent recession. While both categories have rebounded since 2009, neither has returned to levels achieved through years of growth.

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 $448 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. Nearly one-third of this contribution is made by forhire trucking, with the next largest share coming from commercial aviation (figure 4-1).

Many nontransportation industries provide transportation services for their own use, called in-house transportation, such as trucking services operated for a grocery store chain or a construction company. The contribution of inhouse 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, the latest year for which estimates are available, in-house transportation accounted for approximately onethird of the total value added by both for-hire and in-house transportation services to the U.S. economy [USDOT RITA BTS 2011]. Based on the 1:3 ratio established in 1997, in-house transportation likely contributed about onethird, or about $175 billion, of the more than $500 billion estimated as the combined contribution of both for-hire and in-house transportation to the economy in 2010 [USDOT RITA BTS 2011].

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 over the past 20 years. Between 1990 and 2010, the value of U.S. international trade tripled and GDP nearly doubled [USDOC BEA NIPA] while at the same time household income increased by only 2 percent [USDOC Census 2011]. As a share of GDP, U.S. merchandise trade, which includes goods but not services, grew from about 16 percent in 1990 to 22 percent in 2010 [USDOC Census FTD Annual Issues]. Canada, China, and Mexico are the top trading partners in merchandise trade for the United States, as discussed in chapter 3.

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. The 2011 goods deficit ($726 billion) was the highest since 2008 ($816 billion). The 2011 services surplus ($179 billion) was the highest on record. The imports of automobiles ($254 billion) were the highest since 2007 ($257 billion), outpacing automobile exports ($133 billion) in 2011 [USDOC Census Foreign Trade].

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 2011, about 4.3 million people worked in the for-hire transportation sector, with trucking accounting for 30 percent of that total (table 4-2). Employment in many for-hire transportation industries has grown or remained steady since 1995, while employment in air, railroads, and pipelines has declined [USDOL BLS CES]. The employment decline in these three industries is due partly to productivity improvements and, in the case of railroads and airlines, mergers and discontinuance of unprofitable lines and services.

Employment in transportation is not limited to carriers and warehousing. Millions more work in vehicle sales and repairs, vehicle and equipment manufacturing, and a host of other businesses with transportation-related functions. Including jobs from these various industries, transportation-related employment accounted for about 8.7 percent of civilian workers in 2011 (see table 4-2).

Employment by transportation occupation versus industry provides a different perspective. For example, a for-hire transportation company employs people in a variety of occupations, from the chief executive's office to the loading dock—all of which, by association, are in transportation industries. Workers in transportation occupations are also found in other industries. In 2011, there were approximately 2.7 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 4-3).

Productivity, measured by output per hour worked, is an important indicator of economic growth and health. Improvement in productivity helps the United States maintain its international competitiveness despite having higher 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 4-2). Air transportation and line-haul railroads doubled productivity between 1990 and 2010 from divestiture of unprofitable lines and other efficiency improvements.1 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 RITA BTS 2012b]. Over the same period, postal service productivity improved by 19.5 percent and general freight trucking by 28.9 percent. In comparison, overall business productivity increased by 43.9 percent. The relatively low increase for freight trucking may be due to increasing quality-of-service demands by shippers and the public.

Household Expenditures on Transportation

In 2011, the average household expenditure on transportation was $8,293. This translates to almost 16.7 percent of average household expenditures, the second largest household expenditure (figure 4-3). In comparison, households spent more than twice that amount on housing. On average, rural households spent more on transportation ($9,517) than urban households ($7,990). This difference is driven, in part, by longer trips in rural areas and greater use of public transportation in urban households [USDOL BLS CEX].

The lion's share of household transportation expenditures went to the purchase and upkeep of vehicles (93.8 percent), including the cost of gasoline. After generally holding steady from 1994 to 1999, gasoline and diesel prices have nearly tripled since 2000. As shown in figure 4-4, prices increased from $1.29/gallon for regular gasoline in January 2000 to a monthly average price of $3.63/gallon in 2012 [USDOE EIA 2012].2 These increases have caught the attention of consumers who have responded by driving less to reduce fuel use, using more efficient vehicles, or both. Spending on all modes of purchased transportation accounted for the remaining 6.2 percent of household transportation spending in 2011.3 Airline fares were the largest purchased transportation expenditure (among those who fly), followed by mass transit, a distant second [USDOT RITA BTS 2012a]. However, only about one-third of all individuals fly in a one-year period.

Over the last 20 years, the costs of owning a car have kept pace with the 67 percent increase in the Consumer Price Index (CPI). According to the CPI, the cost of owning and operating a personal vehicle grew by 60 percent. As components of owning a car, automobile insurance and maintenance costs doubled while the cost of parts remained about the same. In addition, the CPI notes the cost of public transportation exceed the overall price increase, given that public transportation costs doubled during the 1990-2010 period [USDOL BLS CPI].4

Public- and Private-Sector Spending 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 RITA 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% of that total (table 4-4). Government transportation expenditures more than doubled 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 2010, the value of government-funded construction underway was $108 billion, approximately one-third more than the 2005 figure of $79 billion (see table 1-2 in chapter 1). Approximately three-fourths of this public investment was for highways; the remainder supported such construction as airport terminals and runways, transit facilities, water transportation facilities, and pedestrian and bicycling infrastructure.

During this same period, the private sector also substantially increased spending on transportation construction, but from a much lower level of initial spending. In 2005, the value put in place by private construction was $7 billion; rising by more than 40 percent to nearly $10 billion in 2010. Most of this outlay was for rail projects, with spending increasing more than 50 percent between 2005 and 2010. Private spending for air transportation construction declined during this period [USDOC Census Construction Spending].

Transportation-Related Revenues

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 transportationrelated revenues, while the Federal Government collected the balance. As shown in table 4-5, 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.


U.S. Department of Commerce (USDOC), Bureau of Economic Analysis (BEA):

  • Industry Economic Accounts (IEA). Available at as of January 2012.

  • National Income and Product Accounts (NIPA).

Available at as of March 2012.

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

U.S. Department of Energy (DOE), Energy Information Administration (EIA). 2012. Monthly Energy Review, February 2012. Available at as of March 2012.

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

  • Consumer Expenditure Survey (CEX). 2011. Consumer Expenditure Survey 2009-2010, Table 2400. Available at as of March 2012.

  • Consumer Price Index (CPI). Available at as of March 2012.

  • Current Employment Statistics (CES). Available at as of January 2012.

  • Occupational Employment Statistics (OES). National Occupational Employment and Wages, 2010. Available at as of January 2012.

U.S. Department of Transportation (USDOT), Research and Innovative Technology Administration (RITA), Bureau of Transportation Statistics (BTS):


1 Prior to 2009, all air transportation workers were considered full time. BLS revised its data beginning in 2009 to include both full-time and part-time workers.

2 After peaking in early 2012, gasoline prices started to decline in mid-year, before dropping below $3.00/gallon in some markets in December.

3 The Bureau of Labor Statistics refers to for-hire and other services available to the public as public transportation (in contrast to private transportation). This should not be confused with public transportation such as government-provided transit.

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