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How staying at home in 2020 affected the transportation industry: Part 2

Less travel, less fuel

We continue our series on recent developments in the transportation industry by looking at petroleum and coal products. Like transportation equipment manufacturing (from Part 1 in the series), petroleum and coal products have been affected by the pandemic’s travel reductions. Unlike transportation equipment manufacturing, looking at net income/loss after taxes doesn’t tell the whole story.

To understand the effects that travel reductions have had on petroleum and coal products, it’s important to compare net income/loss after taxes with another measure: net sales, receipts, and operating revenues.

The FRED graph above shows the petroleum and coal industry’s net income after taxes as well as net sales, receipts, and operating revenues (a.k.a. “sales”). Petroleum and coal products may have lost less money from the first quarter to the second quarter of 2020, but the industry lost more per dollar sold.

For example, in the first quarter of 2020, petroleum and coal products lost $13.8 billion on $208 billion in sales. This means that in the first quarter, for every dollar of product sold, the industry lost 6.6 cents. The sector followed up in the second quarter with a $12.9 billion loss on $118.5 billion in sales. So, for every dollar of product sold in the second quarter, the industry lost 10.9 cents. Evaluating multiple series is vital to understanding the full impact on the petroleum and coal products industry: The 6.5% recovery in income in the second quarter came with 43% less sales.

The petroleum and coal products industry gained $12.7 billion in profit in the second quarter of 2019, but lost $12.9 billion in the second quarter this year. That’s a $25.6 billion decrease. Between 2000 and 2019, the industry had only two quarters with after-tax net losses (a $20.8 billion loss in the fourth quarter of 2008 and a $980 million loss in the fourth quarter of 2015). But in both cases, the industry followed up with profits the next quarter.

That wasn’t the case in 2020, as the industry reported consecutive losses in the first and second quarters of 2020, likely the result of millions of Americans and American companies becoming more comfortable working from home, further extending the travel reduction trend. The third quarter’s loss of $3.5 billion marks three consecutive quarters the industry has reported a net after-tax loss.

Keep your eyes out for the final post in this series, on December 17, when we’ll look at changes in debt in these industries.

About the U.S. Census Bureau: The U.S. Census Bureau collects data from thousands of companies to create monthly, quarterly, and annual reports for U.S. policymakers. These reports are free to the public and provide critical insight into the U.S. economy. To view all the Census Bureau economic indicator reports, visit the Briefing Room.

How this graph was created: Search for and select “Quarterly Financial Report: U.S. Corporations: Petroleum and Coal Products: Net Sales, Receipts, and Operating Revenues.” From the “Edit Graph” panel, use the “Edit Line 1” tab to confirm these data fields if necessary: “Units: Millions of Dollars” and “Modify frequency: Quarterly.” Next, use the “Add Line” tab to search for FRED series ID “QFR115324USNO” and click on “Add data series.” To change the line colors, use the choices in the “Format” tab.

Suggested by Brooks Hurry and John Darr from the U.S. Census Bureau.

View on FRED, series used in this post: QFR101324USNO, QFR115324USNO

How staying at home in 2020 affected the transportation industry: Part 1

Profit losses

In 2020, millions of Americans suddenly altered their travel habits, canceled vacations, and worked and learned from home. Data from the Census Bureau’s most recent Quarterly Financial Report (QFR) can help identify some of the effects from these sweeping changes. And in this three-part series, the FRED Blog looks at how Americans’ stay-at-home measures affected profits for two industries:

  • transportation equipment manufacturing (NAICS 336), which includes
    • aerospace products and parts manufacturing (NAICS 3364) and
    • motor vehicles and parts manufacturing (NAICS 3361, 3362, 3363)
  • petroleum and coal products manufacturing (NAICS 324).

The FRED graph displays data on the net income or loss (after taxes) for the transportation equipment manufacturing industry. In the first quarter of 2020, transportation equipment manufacturing companies recorded after-tax profits of $4.1 billion, which was $13.7 billion lower than the first quarter of 2019 and their lowest reported quarterly profit in roughly a decade. From the first to second quarter of 2020, profits decreased $11.8 billion, leading to a $7.7 billion loss. The last time transportation equipment manufacturing companies reported a net loss was during the second quarter of 2009 (the final quarter of the Great Recession, shaded in the graph).

Some areas of the transportation equipment manufacturing industry earned profits during the second quarter of 2020. However, those gains were offset by losses in two sectors of that industry: –$3.2 billion for aerospace products and parts manufacturing and –$4.8 billion for motor vehicles and parts manufacturing.

The transportation equipment manufacturing industry overall earned $15.1 billion in profits in the second quarter of 2019. A year later, it lost $7.7 billion (a decline of $22.9 billion). To put that in perspective, during the Great Recession, the transportation equipment manufacturing industry sank by $34.5 billion between the fourth quarters of 2007 and 2008. It took a total of five quarters for the industry’s profits to rebound.

A quick historical recap: The Great Recession began in the first quarter of 2008, bottoming out in the fourth quarter that year. In the third quarter of 2009, the transportation equipment manufacturing industry began showing a profit for the first time since the recession began, and profits returned to pre-recession levels in the first quarter of 2010. Since then, the industry logged 41 consecutive quarters of profit, before the pandemic hit.

The latest QFR shows profit in the third quarter of 2020 crossed back into the positive, rising to $17.8 billion, highest profit since $18.9 billion in the third quarter of 2019.

Check back on December 14 for the next post in this series, which looks at the petroleum and coal products industry.

About the U.S. Census Bureau: The U.S. Census Bureau collects data from thousands of companies to create monthly, quarterly, and annual reports for U.S. policymakers. These reports are free to the public and provide critical insight into the U.S. economy. To view all the Census Bureau economic indicator reports, visit the Briefing Room.

How this graph was created: Search for and select “Quarterly Financial Report: U.S. Corporations: Transportation Equipment: Income (Loss) After Income Taxes.” To change the line color, use the choices in the “Edit Graph” panel’s “Format” tab.

Suggested by Brooks Hurry and John Darr from the U.S. Census Bureau.

View on FRED, series used in this post: QFR115TRAUSNO

A history of European exchange rates

Data during and after the Bretton Woods system

The Bretton Woods agreement, signed by 44 nations in 1944, established an international monetary system that

  • instituted the convertibility of the U.S. dollar to gold
  • set fixed exchange rates with respect to the dollar
  • and made the dollar the currency of reference.

The graph above shows the exchange rates for the United Kingdom, Germany, France, Italy, and Spain between 1950 and 2017 with respect to the U.S. dollar. (By the way, the data for the euro area countries are calculated in euros using the official conversion rate for the years before the euro.)

It’s easy to see that, during the Bretton Woods era (1950-1971), the exchange rates were fixed, with the exception of a few managed adjustments.

The dashed black line in 1971 marks the year President Nixon unilaterally terminated the convertibility of the U.S. dollar to gold, which signaled the decline of the Bretton Woods system. After the system ended in 1973, exchange rates became more volatile, but also started to converge, given European collaborative policies to prevent excessive variation in exchange rates.

As of 1995, countries planning to adopt the euro had to meet currency convergence criteria, which helped with the stabilization of their exchange rates. In the end, the graph shows the current euro/dollar exchange rate for these countries. Of course, the British pound has always retained its own distinct exchange rate.

How this graph was created: Search for and select “Exchange Rate (market+estimated) for United Kingdom.” From the “Edit Graph” menu, use the “Add Line” tab to search for other data series. To add the vertical line, refer to these instructions. The “Data start/end” of the vertical line is 1971-01-01.

Suggested by Praew Grittayaphong and Paulina Restrepo-Echavarria.

View on FRED, series used in this post: XRNCUSDEA618NRUG, XRNCUSESA618NRUG, XRNCUSFRA618NRUG, XRNCUSGBA618NRUG, XRNCUSITA618NRUG


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