February 13, 2010

Towards Real Time Computational Governance

In my 2010 Foresight presentation on high impact technology and processes, I initially mentioned an idea for computational governance.

Computational governance mechanisms would assist in better decisions in government and business. The goal would be to use technology (sensors, imaging etc...) to as quickly as possible get accurate feedback on the results of new policies so that the need for corrective action can be detected and acted upon. There is also a need for co-evolution of societal models and business market models/simulation systems and rapid feedback on the results of government and business plans. Models and Plans are all flawed and setting up better feedback processes can enable pre-implementation testing and validation and post implementation tracking and fine-tuning.

Ceridian Corporation and the UCLA Anderson Forecast jointly announced the release of a first-of-its-kind indicator able to track the status, and potentially the future direction, of the U.S. and regional economies. Dubbed the Ceridian-UCLA Pulse of Commerce Index (PCI) by UCLA Anderson School of Management, the PCI is based on real-time diesel fuel purchases by over-the-road truckers using a Ceridian card at more than 7,000 locations across the United States.

The monthly index captures the real time monitoring of the movement of raw materials, goods-in-process and finished goods to retailers, factories and consumers across the country. Through Ceridian’s electronic card payment services for transportation industries, Ceridian is able to track and analyze the volume of fuel being used by truckers on a yearly, monthly, weekly and even daily basis. It is in short, a real-time data set that tracks fuel transactions around the United States, enabling economists to observe where and when goods are being transported around the country.

The PCI series is similar to an existing, after-the-fact survey from the American Trucking Association called the Transportation Service Index (TSI). But Leamer says the TSI data are simply too noisy, subject to both revision and the lack of incentive for survey respondents to be accurate. In comparison, he noted, the PSI is based on actual transactions on a second-by-second basis all over the country.

The Ceridian Index is here

According to the January Ceridian-UCLA Pulse of Commerce Index, the U.S. economy fell at an annualized rate of 36.8 percent which comes in the wake of December’s significant increase in GDP. The more reliable three-month moving average for January showed a 3.3 percent gain at an annualized rate following the significant annualized rate of 14.6 percent the month before.

According to the initial PCI release, there is a long-term relationship between real GDP and PCI. The two series track similarly, though the PCI demonstrates more volatility during recessions. This is due to the fact that the truckable goods sector suffers more than the service sector during recessions, as consumers and businesses postpone their purchases of durable goods and equipment, but continue to rent housing, go to school and visit doctors.

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