Why America Stopped Driving

Aging Americans show how they impact the economy.

Feb 5, 2014 at 12:06PM


In 1922, a group of sociologists went to Munice, Indiana, to study how the average American family lived. Almost everyone, they found, was addicted to their car. "We'd rather do without clothes than give up the car," said one mother of nine children. "I'll go without food before I'll see us give up the car," said another. One researcher reminded a housewife that her family had a car but no bathtub. "Why," said she, "you can't go to town in a bathtub!" The automobile was barely two decades old, and Americans already couldn't imagine living without one.

But a change is taking place that is unprecedented since those sociologists' study nearly a century ago: Americans are driving less.

Miles driven per American peaked in 2005, and have since declined 8.8%. This has never happened before. From 1900 to 2007, vehicle miles driven increased every year except 1932, during the Great Depression, according to data from the Department of Transportation. It's now declined in three of the past five years. From 1971 to 2005, miles driven per person increased every year expect 1975. That figure has now declined in each of the last eight years.

You get some staggering numbers when you add this stuff up. If driving habits merely maintained 2005 levels, Americans would have driven 918 billion more miles than they actually did over the last eight years. That's like driving to Mars and back 13,000 times.

Not only is this decline unprecedented, but it was totally unforeseen. In one amusing display of how off the nation's best traffic forecasters (it's an actual job) have been, Eric Sundquist of the State Smart Transportation Initiative showed the Department of Transpiration's recent forecasts of miles driven compared to what actually occurred:

Vmt C P Chart Big

What's going on? 

The most shocking thing about this driving decline is that it doesn't seem to be caused by the weak economy.

U.S. PIRG Education Fund crunched the numbers last and year, looking at how Americans driving habits changed broken out by state. It found plenty of states where driving plunged, yet economies and job markets were healthier than the national average, and states whose economies were ravaged by the recession, but where miles driven actually went up. The researchers looked at it every way they could -- the unemployment rate, changes in employment, etc. There was very little link between the economy and the decline in driving. Of the 10 states where employment fell the fastest during the recession, only two were among the top 10 states with the largest decline in driving. On average, the group found "that declining rates of driving do not correspond with how badly states suffered economically in recent years."

Some say higher gas prices have caused drivers to stay home. It's a nice story, but there's not much evidence backing it up. Gas prices are lower today than they were six and a half years ago. And average fuel efficiency has surged over the last decade, putting the real cost of gasoline usage today no higher than it was a decade ago.

The most compelling argument for why driving is in decline is also one of the scariest, because it might not be temporary. It's demographics.

The most important group of drivers are those age 35 to 54. They're in their prime working years, driving an average of 15,291 miles per year, according to the Department of Transportation. But driving falls off quickly as people move into retirement. Americans age 55 to 64 drive fewer than 12,000 miles per year, on average. And Americans age 65 and older drive an average of only 7,650 miles per year -- half what they drove in their prime working years.

That's a critical difference, because after rising for decades, the number of prime-driving age Americans plunged by 2.8 million over the last eight years as baby boomers age into their 60s. The number of prime-age drivers peaked at the exact time miles driven per capita peaked:


Source: Census Bureau, author's calculations.

For decades, economists have wondered what will happen to the economy when the baby boomers retire.

Will they spend less money? Will that hurt the economy?

The driving slowdown might be one of our first clear answers.

Things are always more complicated than they seem, and demographics can't explain all of the decline. But it's a big cause, and it'd had a big impact on the economy. Remember, Americans drove 918 billion fewer miles over the last eight years than they would have if 2006 driving trends hadn't changed. If a car has a lifespan of 200,000 miles, that ultimately means demand for vehicles over the last eight years was about half a million cars per year lower than it would have been at old driving rates.

The number of prime-age Americans is about to start growing again, so this trend could ease.

But America is getting older. That's going to make growing the economy over the next 50 years harder than it was over the last 50. "The trick is growing up without growing old," baseball great Casey Stengel once quipped. We'll see if America can. 

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics. 


Contact Morgan Housel at mhousel@fool.com The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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