Every Sunday in Disruption we look at traffic congestion patterns around the world, leveraging tech-enabled crowdsourced measurements from millions of smartphones and GPS systems. The idea here is the traffic congestion is a proxy for real-time economic activity, a particularly useful thing to measure as we consider 2021’s pace of economic recovery from last year’s deep recession.
Today we’ll focus on the US to highlight the quite dramatic differences between regions. The data comes from Apple Mobility, which uses automatic re-routing requests on Apple Maps from pedestrians, mass transit users, and drivers to measure congestion levels.
Let’s start with a three-fer of America’s largest cities: New York, Los Angeles and Chicago. Notice that there’s little difference between them:
- All 3 peak in terms of driving and pedestrian congestion over the summer of 2020 (red and yellow lines below).
- The current comparisons to January 13, 2020 (the baseline for all the charts today) are either flat or slightly positive/negative for walking/driving congestion.
- Mass transit usage is declining from mid-year “highs” (purple lines below).
With that, here are the charts:
One might think that if America’s 3 largest cities all have similar real-time economic measurements, then the rest of the country would look similar, but that is not the case.
Exhibit A: Houston, Texas. Here we see that driving/pedestrian congestion remained fairly strong over the second half of 2020 and mass transit usage is pretty flat (albeit at low levels). While Austin is getting a lot of press as a desirable city for corporate and individual relocation, its congestion data is not as strong as Houston’s (link at the end of this section so you can plug this or any other city to see Apple’s Mobility data).
Exhibit B: Miami. As Jessica has been showing you regularly over the past 6 weeks, not every US leisure travel destination is gathering cobwebs. Miami was a hot ticket for New Year’s, as this data reveals. The pedestrian congestion data (yellow) shows this especially well.
The upshot of today’s analysis is that regional differences are having – and will continue to have – a meaningful impact on the shape of the US post-pandemic economy. Miami is a favorite tourist destination for younger, often single, people and they are showing up regardless of the public health crisis. Houston is the capital of the American oil industry, and crude’s recent price recovery is helping that local economy. The congestion data for both those metro areas indicates a better pace of growth than what we see for New York, Los Angeles, and Chicago.
From an investment perspective, this is an important observation. For example, we like Energy stocks (small caps especially, even if they are obviously very risky) as a deep-value recovery play and the Houston traffic data shows that commodity prices are in fact a tide that is lifting many boats. Conversely, we know that Miami is a real one-off in terms of destinations because business travel to places like NY or LA is still quite slow. That tells us to be cautious on the airlines for now.
Summing up: we encourage you to be sensitive to the spotty nature of the US economic recovery as you consider any single-stock investments, particular in US small caps that are often more regional than national plays. The differences we’ve highlighted today are likely to remain for much of 2021.
Apple Mobility data: https://covid19.apple.com/mobility