Decoding the TSI Index: What February’s Rebound Tells Us About the US Economy
Welcome, fellow investors and traders! Today, we’re going to dive deep into a fascinating economic indicator that often flies under the radar but provides critical insights into the health of the US economy: the Transportation Services Index (TSI). Published monthly by the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS), the TSI measures the output of the for-hire transportation industry. Think of it as the pulse of goods and passenger movement across the nation. Why is this index so important? Because when goods are moving and people are traveling, it usually signifies economic activity. Conversely, slowdowns in transportation often precede or coincide with economic contractions.
Understanding the TSI, particularly the dominant Freight Transportation Services Index, can give you an edge in interpreting broader economic trends. It acts as a valuable confirmation signal or even an early warning sign for shifts in economic momentum. As we’ll see, the latest data for February 2025 shows a promising uptick after a slight dip in January. But what does this volatility mean? Is this rebound sustainable, or just a blip? Let’s break it down together, just like a teacher guiding students through a complex equation, but hopefully more engaging!
To further understand the current economic climate, it may be beneficial to look at the TSI data alongside other economic indicators.
A Closer Look at the February 2025 Freight TSI Performance
The most recent release from the BTS delivered some positive news for those watching freight activity. The Freight TSI rose by a notable 0.9% in February 2025 compared to January 2025. This increase brought the index level to 137.9. This gain is significant because it reverses a decline observed in the previous month, suggesting renewed momentum in the movement of goods across the United States.
To put this month-over-month change into perspective, let’s also look at the year-over-year figure. In February 2025, the Freight TSI was also 0.9% higher than it was in February 2024. While not a massive leap, this year-over-year growth indicates that freight activity, despite some recent choppiness, remains modestly above where it was a year prior.
Why does a 0.9% monthly increase matter? In an economy where supply chain efficiency and goods movement are paramount, even small percentage changes in a comprehensive index like this can signal shifts in demand, production, and overall business confidence. It tells us that the volume of physical goods being shipped via the major for-hire modes saw a measurable expansion during the month.
So, we see the number went up in February. That’s good, right? But to truly understand the story, we need to look beneath the surface. What specific parts of the transportation industry contributed to this positive result?
Modal Contributions: Unpacking the Drivers Behind the February Rise
The Freight TSI isn’t just one number; it’s a composite index that pools data from several key transportation modes. Understanding which modes gained and which faltered in February 2025 provides a richer picture of the freight landscape. Think of it like looking at different sectors within a stock market index – some are leading the charge, while others might be lagging.
In February 2025, the increase in the Freight TSI was driven by gains in several crucial areas:
- Air Freight: This mode saw a notable increase, suggesting stronger demand for faster, often higher-value, goods transport.
- Rail Carload: Traditional rail shipments of bulk goods and raw materials also rose, pointing perhaps to increased activity in sectors like manufacturing or mining.
- Pipeline: Movement of liquids and gases via pipelines saw growth, often tied to energy sector activity.
- Trucking: As the backbone of the US freight system, an increase in trucking activity is a strong positive signal for consumer demand and manufacturing distribution.
| Transportation Mode | Performance in February 2025 |
|---|---|
| Air Freight | Increase noted |
| Rail Carload | Increase noted |
| Pipeline | Increase noted |
| Trucking | Increase noted |
While these modes showed strength, others didn’t perform as well, tempering the overall index gain:
- Inland Waterways (Water): This mode experienced a decrease, which could be influenced by factors like weather conditions affecting river levels or specific commodity movements tied to water transport.
- Rail Intermodal: Shipments involving multiple modes, particularly containers moved by rail and truck, remained largely unchanged. This flat performance is worth noting, as intermodal is often seen as a good indicator of broader trade and logistics activity.
This mix of performance across modes is typical. The February data suggests strength in diverse areas like trucking (consumer/manufacturing), rail carload (heavy industry/commodities), air freight (high value/speed), and pipelines (energy). The decline in water transport and flatness in intermodal prevent the picture from being one of universal strength, but the breadth of gains is certainly more encouraging than concentrated weakness.
Does this modal breakdown give you a clearer idea of the forces at play within the freight economy?
Recalling January 2025: The Preceding Dip and Recent Volatility
To fully appreciate the February rebound, we must consider what happened in January 2025. The BTS data revealed that the Freight TSI actually fell by 0.4% in January 2025 from its December 2024 level. The index stood at 137.1 in January (subsequently revised slightly from an initial estimate of 137.3).
This January dip marked a continuation of some recent volatility. Before the February rebound, the Freight TSI had seen declines in three of the previous five months (from August 2024 through January 2025), according to the BTS releases. This pattern underscored a certain choppiness in the freight sector as the year began.
Which modes were responsible for the January downturn? The decreases were primarily driven by:
- Air Freight: Interestingly, this mode that rose in February had declined in January.
- Rail Carload: Like air freight, rail carload shipments fell in January before rebounding in February.
- Rail Intermodal: This mode saw a decline in January, contrasting with its flat performance in February.
- Trucking: Even trucking experienced a dip in January, highlighting broad-based weakness that month.
The modes that showed increases in January were inland waterways and pipelines. This illustrates how different parts of the transportation network can move in different directions at any given time, influenced by seasonal factors, specific commodity demand, and weather, among other things.
Comparing the January decrease (led by air, rail, trucking) to the February increase (led by air, rail, pipeline, trucking) reveals shifts in which parts of the economy were driving demand for transport. The fact that key modes like trucking, air freight, and rail carload reversed course from decline to growth is particularly noteworthy for interpreting the recent trend.
So, we’ve seen a bounce back in February after a drop in January. What does this pattern tell us about the overall trend in US freight? To answer that, we need historical perspective.
Putting it in Context: Historical Highs, Lows, and the Pre-Pandemic Gap
Looking at the current Freight TSI levels (137.9 in February 2025 and 137.1 in January 2025) in isolation isn’t enough. We need to compare them to significant points in history to understand the full picture of recovery and growth.
The all-time high for the Freight TSI occurred in August 2019. Depending on the specific release and subsequent revisions, this peak was recorded around 140.7 (as noted in the Feb 2025 release context) or 141.4 (as noted in the Jan 2025 release context). Regardless of the precise decimal, both figures represent a peak of freight activity before the significant disruptions of recent years.
How do current levels stack up against that pre-pandemic peak? The February 2025 level of 137.9 is approximately 2.0% below the August 2019 peak of 140.7. The January 2025 level of 137.1 was approximately 3.0% below the August 2019 peak of 141.4.
What does this tell us? Despite the recovery since the pandemic lows, the volume of goods being shipped for hire has not yet fully returned to the levels seen just before the COVID-19 pandemic began impacting global supply chains and demand patterns. This gap indicates that the freight economy, while resilient, is still operating at a slightly lower peak capacity or demand level than its pre-pandemic high point.
Now, let’s look at the lows. The Freight TSI hit a recession low of 94.9 in April 2009 during the aftermath of the 2008 financial crisis (based on Feb 2025 release data; Jan 2025 release cites 95.1). Comparing the February 2025 level (137.9) to this recession low shows a remarkable increase of 45.3%. This highlights the significant growth in the freight sector over the past 15 years.
More recently, the index dropped significantly at the start of the COVID-19 pandemic, hitting a low of 123.8 in April 2020 (based on Feb 2025 release data; Jan 2025 release cites 124.3). The February 2025 level (137.9) is a solid 11.4% above that pandemic low. This demonstrates the swift and strong recovery in freight activity after the initial shock of lockdowns and economic shutdowns.
We can also look at longer-term growth trends. Based on the February 2025 data, the Freight TSI is up 2.1% over the past five years (from February 2020) and an impressive 13.2% over the past ten years (from February 2015). The January 2025 data shows slightly different figures: up 0.8% over five years (from January 2020) and 11.4% over ten years (from January 2015). These long-term figures confirm that the underlying capacity and demand for freight transport have expanded significantly over the past decade, despite recent volatility.
So, while we are substantially above the lows of 2009 and 2020, we are still slightly below the peak of 2019. What does this blend of recovery and remaining gap suggest about the current state of the economy?
The Freight TSI as an Economic Bellwether: Shipments and the Economy
Why do economists and analysts pay such close attention to indices like the Freight TSI? It boils down to a fundamental truth about market economies: the movement of goods is inextricably linked to production and consumption. When factories are producing, raw materials need to be shipped in, and finished products need to be shipped out. When consumers are buying, goods need to be transported from warehouses and stores to their doorsteps.
The Freight Transportation Services Index is therefore considered a crucial economic indicator. It’s not just a measure of the transportation industry’s health; it’s a proxy for broader economic activity. The BTS itself notes in its research that there is a clear relationship between economic cycles and the TSI.
Think of the freight network as the circulatory system of the economy. Just as a doctor checks your pulse to gauge your health, economists check the pulse of freight movements to gauge the health of the economy. An increase in freight volumes typically correlates with rising industrial production, increased retail sales, and higher overall economic output. Conversely, a slowdown or decline in freight can signal weakening demand or disruptions in the supply chain.
Because the TSI data is released relatively quickly after the end of the month, it provides timely insights. While other indicators like GDP are released quarterly, the monthly TSI gives us a more frequent check-up on economic momentum. Monitoring the trend of the Freight TSI can help you anticipate changes in economic cycles, which is invaluable information for investment decisions.
| Economic Indicator | February 2025 Performance | January 2025 Performance |
|---|---|---|
| Industrial Production Index | +0.7% | +0.5% |
| Housing Starts | +11.2% | -9.8% |
| Personal Income | +0.8% | +0.9% |
| ISM Manufacturing Index | 50.3 | 50.9 |
Does the idea of freight movement being a leading or coincident economic indicator make sense to you? How might tracking something like the TSI help you understand the overall economic climate better than just focusing on news headlines?
Comparing TSI Performance to Other Concurrent Economic Signals
To reinforce the point about the TSI being an economic bellwether, let’s look at how its performance in February and January 2025 aligned (or didn’t align) with other key economic indicators released around the same time.
According to the context provided by the BTS releases:
- Industrial Production (IP) Index: This index, which measures the output of the manufacturing, mining, and utilities sectors, rose by 0.7% in February 2025 and 0.5% in January 2025. The Freight TSI’s increase in February aligns positively with this rise in industrial output. However, the TSI’s dip in January occurred despite IP also rising, suggesting other factors influenced freight that month, or perhaps a slight lag/lead relationship.
- Housing Starts: A measure of new residential construction, Housing Starts were up a significant 11.2% in February 2025 but had fallen 9.8% in January 2025. This volatility in the housing sector (which drives demand for transporting building materials and household goods) mirrors the recent month-to-month swings seen in the Freight TSI.
- Personal Income: This indicator of household earnings rose 0.8% in February 2025 and 0.9% in January 2025. Consistently rising personal income suggests underlying consumer demand strength, which should, in theory, translate to continued demand for goods and thus freight. The February TSI rise fits with this picture of consumer health, while the January dip seems slightly out of sync with the income gains.
- ISM Manufacturing Index: This survey of manufacturing purchasing managers provides a gauge of factory activity. It fell slightly to 50.3 in February 2025, indicating slowing growth (though still expansionary, as a reading above 50 signals growth). In contrast, it had risen to 50.9 in January 2025, signaling a return to growth after some contraction. The February TSI rise happened alongside slowing manufacturing growth according to the ISM, while the January TSI dip occurred when ISM signaled a return to expansion.
This comparison highlights that while the Freight TSI generally correlates with broader economic trends, the relationship isn’t always perfectly synchronized month-to-month. The February TSI rebound aligns well with rising Industrial Production and Housing Starts, and consistent growth in Personal Income provides a supportive backdrop. The ISM manufacturing signal, however, presents a slightly different picture for February. This reinforces the idea that the TSI is one piece of the economic puzzle, and its signals should be considered alongside other data points.
Observing these correlations helps us confirm the TSI’s utility but also reminds us that economic analysis requires looking at multiple indicators, not just one in isolation.
The Passenger TSI: A Different Story in the Post-Pandemic Era
While the Freight TSI is often the primary focus for those analyzing economic output and supply chains, the Transportation Services Index also includes a Passenger TSI. This component tracks for-hire passenger travel by modes such as air (including passenger travel), rail passenger (like Amtrak), and transit (local public transportation).
The story of the Passenger TSI in recent years has been dramatically different from that of freight, largely due to the lingering effects of the COVID-19 pandemic, particularly on air travel patterns. The BTS has noted challenges in accurately estimating air passenger travel in the wake of the pandemic, which can sometimes lead to delays in releasing the final Passenger TSI figures.
Based on recent releases, the Passenger TSI has shown recovery but remains persistently below its pre-pandemic peak. For instance, the index has been above its March 2020 level (the initial pandemic impact month) for many consecutive months (cited as 45 or 43 months in the releases depending on the comparison period). However, and significantly, it has remained below its February 2020 level (the month just before the pandemic hit the US) for an even longer period (cited as 59th or 58th consecutive month).
The January 2025 Passenger TSI data, while not providing a specific index level in the provided summary, indicated a decline of 1.3% compared to December 2024 (though the comparison basis period isn’t perfectly clear in the text). December 2024 itself had seen a 1.6% rise from November 2024.
What does this tell us? Passenger travel, particularly business travel and perhaps certain segments of leisure travel, has not fully recovered to its pre-pandemic volumes, even as freight has rebounded strongly. This divergence highlights how different sectors of the economy and different types of transportation have been impacted uniquely by recent events. For investors watching industries reliant on passenger movement (airlines, hospitality, etc.), the Passenger TSI remains a vital, though sometimes delayed, indicator.
It’s a good reminder that transportation isn’t monolithic; freight and passenger movement tell distinct, though sometimes related, economic stories.
The Crucial Distinction: BTS Economic Index vs. TCW Financial Fund (TSI)
Now, here’s a point of potential confusion that we absolutely need to address to ensure clarity, especially for new investors or those just beginning to research the market. You might encounter the ticker symbol “TSI” in your financial research, and it’s essential to understand that it refers to two completely different things.
The Transportation Services Index (TSI) that we’ve been discussing is an economic indicator published by the U.S. government (BTS). It measures the volume of transportation activity and serves as a macroeconomic data point. You cannot buy or sell the TSI index itself, just as you cannot directly buy or sell the Consumer Price Index (CPI) or the unemployment rate.
There is also a publicly traded financial product with the ticker symbol TSI. This is the TCW Strategic Income Fund, Inc., which trades on the New York Stock Exchange (NYSE). This is a close-ended balanced mutual fund managed by TCW Investment Management Company.
What does the TCW Strategic Income Fund invest in? It’s a diversified fund holding both US public equity (stocks, across growth and value styles) and various types of fixed income instruments, including mortgage-related securities, asset-backed securities, high yield bonds (junk bonds), and other debt instruments. Its performance is benchmarked against indices like the S&P 500, NASDAQ, and various bond indices (Barclays U.S. Aggregate Bond Index, Citigroup High Yield Cash Pay Index, etc.).
Its market capitalization, P/E ratio, profit margin, and other financial metrics are completely unrelated to the economic data of the Transportation Services Index. The only connection is the shared three-letter symbol.
For someone researching the “TSI index,” it is highly probable they are interested in the economic indicator published by the BTS, not the TCW mutual fund. Always double-check the source and context of the data you are looking at to ensure you are focused on the correct “TSI.” Are you looking for macroeconomic data or information about a specific investment product?
Making this distinction is crucial for accurate research and avoiding investment mistakes based on confusing symbols. Just because two things share a name or symbol doesn’t mean they are related!
Understanding the Nuances: Revisions, Seasonal Adjustments, and Base Years
Like many complex economic data series, the BTS Transportation Services Index comes with its own set of technical details that are important for precise understanding. Knowing these nuances helps you interpret the data correctly and appreciate its strengths and limitations.
One key aspect is that the TSI data, when initially released each month, is subject to revisions. What does this mean? The number you see reported one month might be slightly changed in subsequent releases. These revisions happen for a few primary reasons:
- Concurrent Seasonal Analysis: The BTS uses statistical methods to remove the typical seasonal patterns from the data (like increased shipments during holiday seasons or agricultural harvests). This process is updated monthly as new data comes in, which can lead to minor adjustments in previously reported months.
- Late Data Submissions: Not all transportation companies report their data instantly. Revisions incorporate data that arrived after the initial calculation for a given month.
- Annual Weight Updates: Each year, the BTS updates the weights given to different transportation modes within the composite index based on the latest comprehensive data available, like the Census Bureau’s Economic Census. This can lead to historical revisions.
These revisions are standard practice for many economic indicators and are not a cause for concern. They simply mean that the most recent data is preliminary and the numbers may settle slightly as more information becomes available. It’s always best to look at the latest version of the data when analyzing historical trends.
Another important point is that the TSI is a seasonally-adjusted index. This means the BTS tries to smooth out the predictable ups and downs that happen at certain times of the year due to factors like holidays, weather, and agricultural cycles. The goal is to show the underlying trend in transportation activity, free from these regular fluctuations. This is why month-to-month comparisons are meaningful – they are comparing apples to apples, removing the expected seasonal variation.
Finally, the index is based on a specific base year. For the Freight TSI, the base year is 2000, with the monthly average for that year set to an index level of 100. All subsequent index values are relative to that base. So, an index value of 137.9 in February 2025 means that the volume of for-hire freight transportation output was 37.9% higher than the average monthly volume in the year 2000.
Understanding these technical details – revisions, seasonal adjustment, and the base year – is part of becoming a more sophisticated interpreter of economic data. It helps you read beyond the headline number and appreciate the methodology that creates the index.
What the Recent TSI Data Might Signal for the Broader Economy
So, we’ve analyzed the data: a dip in January 2025 followed by a noticeable rebound in February 2025. What might this short-term volatility and subsequent recovery signal for the US economy?
The February increase is certainly a positive sign. Coupled with rising Industrial Production and Personal Income during the same period, it suggests that the underlying demand for goods and the ability of the supply chain to move them saw renewed strength. The gains across multiple modes – trucking, rail carload, air freight, pipeline – indicate a potentially broad-based improvement in activity, rather than just strength in one narrow segment.
However, the fact that the index fell in January and remains below its August 2019 peak cannot be ignored. The January dip highlighted that the recovery isn’t necessarily a smooth, upward line. Factors causing weakness in certain modes that month (like air freight and rail intermodal) could reappear. The persistent gap relative to the 2019 high suggests that demand or capacity within the freight system hasn’t quite reached the previous peak levels, potentially reflecting structural shifts or lingering economic headwinds.
What does this mean for investors and traders? The February data provides some reassurance that the freight economy isn’t collapsing. It suggests resilience and a potential resumption of growth after a soft patch. This could be interpreted as a signal that predictions of an imminent sharp economic downturn might be premature, at least based on transportation activity.
However, the recent volatility means we should watch future releases closely. Is the February rebound the start of a sustained upward trend, or just a temporary bounce? Continued strength in the Freight TSI, particularly if accompanied by gains across all major modes and aligning with other positive economic data, would bolster confidence in ongoing economic expansion. Conversely, another dip or prolonged stagnation would raise concerns.
Monitoring the TSI alongside other key indicators like consumer spending, manufacturing surveys, and employment data will be crucial for forming a complete picture of the economic trajectory in the coming months. The TSI provides valuable, tangible evidence of physical goods moving through the economy, which is hard to ignore.
Conclusion: The Transportation Services Index Remains a Vital Economic Barometer
In conclusion, the U.S. Transportation Services Index (TSI), particularly the Freight component, serves as an indispensable economic barometer. It provides a direct measure of the output of the for-hire transportation sector, offering tangible insights into the flow of goods and people that underpin the entire economy.
The recent data for February 2025 showed a welcome 0.9% rebound in the Freight TSI, reaching 137.9, reversing a 0.4% decline in January. This increase was driven by gains in key modes like trucking, rail carload, pipeline, and air freight, suggesting potentially broad-based strength returning to the freight network. While the index is significantly above its 2009 recession and 2020 pandemic lows, it still remains slightly below its August 2019 pre-pandemic peak, indicating that freight volumes haven’t fully recovered to previous highs.
The Freight TSI’s performance continues to show a strong correlation with broader economic indicators like Industrial Production, Housing Starts, and Personal Income, reinforcing its value as a proxy for overall economic health. The Passenger TSI, meanwhile, faces different challenges and remains below its pre-pandemic levels, highlighting the distinct recovery paths of different transportation sectors.
It is also vital to remember that the BTS Transportation Services Index, an economic metric, is distinct from the TCW Strategic Income Fund, Inc., a financial investment product traded under the same ticker symbol, TSI.
Understanding the TSI, its components, and its relationship to other economic signals is a valuable skill for any investor or trader seeking to deepen their market analysis. The recent February rebound offers a positive signal, but the preceding volatility reminds us that vigilance is required. Continued monitoring of the TSI in future releases will be essential for gauging the momentum and trajectory of the US economy. By tracking this index, you gain a clearer view of the actual physical movement of goods powering the nation’s commerce.
tsi indexFAQ
Q： What is the Transportation Services Index (TSI)?
A： The TSI measures the output of the for-hire transportation industry in the US, providing insights into economic activity.
Q： How is the TSI relevant to investors?
A： The TSI serves as an economic indicator, helping investors gauge trends in demand and supply chain efficiency.
Q： How often is the TSI updated?
A： The TSI is published monthly by the U.S. Bureau of Transportation Statistics.