It should come as no surprise that as our economy is suffering because of lack of demand for goods and services, caused by the lack of good jobs, it is hurting other parts of the economy. Toll roads are not turning out to be the “cash cow” alternative to raising the gas tax that politicians made them out to be, Credit Ratings Agency Warns of Tolling Troubles.
Toll roads at one point appeared to be unstoppable. Steady growth in traffic yielded rapidly rising profits, especially for pioneers in the field such as Australia’s Macquarie Bank where executives became so rich from deals that included the leasing of US roads that it was dubbed the “millionaires’ factory.” That all changed when the recession took hold and motorists scaled back on the mileage driven each year. Losses began to mount, and as a report released last week by Fitch Ratings argues, the dynamics for tolling may not improve in the near future.
“Fitch tracks data on toll roads, bridges, and tunnels across its ratings portfolio,” Fitch analysts wrote in the report, Downshifting: US Transportation Reacts as GDP Growth Flattens. “Traffic declined year over year as much as 10 percent during the Great Recession. Sustained positive growth in traffic commenced in February 2010. The most recent Fitch data indicates that growth in traffic volumes began slowly declining on tolled facilities, heading to zero growth in second-quarter 2011.”
The US Bureau of Transportation Statistics reported a similar decline in commercial transportation services for both goods and passengers. Despite some recovery, the index remains below pre-recession levels. These transportation statistics mirror figures for consumer spending which began recovering early last year only to falter this March. Growth in consumer spending for the second quarter of 2011 was under 0.1 percent.
The credit ratings agency argues activity in the economy at large and the in the transportation sector are directly linked. When someone gets a job, he generally gets in his car to drive to work. When stores sell goods, the supplies, raw materials and final product are usually transported by truck. When unemployment is high and sales are low, such transportation activity drops. [Emphasis added]
That last paragraph sums up our bad economic situation “to a T”. Until our government gets to work, making sure everyone that wants to work can find a job, then our economy will stay as it is. Until the unemployed are put back to work, demand in our country will not go up. And until demand rises businesses have no reason to hire more workers.
Of course toll roads were no bargain before the economic slowdown. Even in Central Texas, where the economy is said to be in better shape, we learned in July that the toll roads are not delivering as promised.