Decreases in transport demand contributed to second U.S. GDP loss on record

New data from the federal government reveals that transportation demand and investment in 2020 plummeted, contributing to the largest decline in national gross domestic product on record.

In 2020, transportation demand dropped by more than 15% compared to 2019, according to the Bureau of Transportation Statistics. That is the largest annual decrease since data collection began in 2002. It is also more than double the second-largest decrease of 7.4% during the Great Recession in 2009.

Private investment in new transportation structures and equipment (e.g., motor vehicles, aircraft, ships, etc.), which accounts for 14% of transportation demand, fell sharply by 34%, a loss of nearly $105 billion. Accounting for 23% of demand, transportation services declined by 26% or $117 billion.

There were increases in the top two contributors to transportation demand. Motor vehicles and parts demand increased by 3% or $17 billion. That category accounts for more than a third of final demand. At about 23% of demand, government transportation-related purchased increased by $2 billion.

The value of 2020’s transportation demand for goods and services reached $1.6 trillion. That sounds like a lot, but accounts for only 7.7% of United States GDP, the smallest contribution on record.

Demand for transportation typically hovers around 10% of gross domestic product. Again, the second smallest share of GDP occurred in 2009 (8.6%) due to the Great Recession.

National GDP dropped by 2.5% in 2020, according to the World Bank. The only other year on record when there was a drop in GDP was in 2009. The Great Recession sent the GDP downwards by nearly 2%.

Total public and private investment in transportation dropped by 24% in 2020, the second largest annual decrease. The largest decrease in transportation investment occurred in 2009 with a 30% slide. According to the Bureau of Statistics, public and private investment estimates include new structures and equipment and exclude maintenance and repair of existing structures or equipment. Estimates also exclude pipeline, which are part of mining infrastructure investment in national data.

That decrease is the result of the private sector divesting in transportation, which contributes to the majority of transportation investments. In 2020, private investment in transportation decreased by 34% to $222 billion. At more than 50%, the only decrease larger occurred in 2009, plummeting the value to $84 billion. Investment swings in the private sector are relatively large, ranging from 2009’s decrease to an 85.5% increase the following year.

Meanwhile, the public sector bumped up transportation investment by 0.8%. Government investment is much more consistent than the public sector. The biggest drop of 7% occurred in 2017, with the largest increase occurring in 2015 at 6%. By value, annual government transportation investment ranges from $77 billion to $133 billion.

Breaking it down by highway and street construction, public investment increased by 1% in 2020. Private investment in construction in general decreased by 8%, about the same drop experienced in 2009. LL