Want to know which way the economy is headed? Find out how much diesel fuel is being burned by the nation's over-the-road truckers.

That's the theory behind a new economic index developed by Bloomington-based Ceridian Corp., a provider of electronic payments services, and UCLA's Anderson School of Management.

Called the Pulse of Commerce Index, the survey, to be released Wednesday, shows the U.S. economy was essentially flat over the first two months of the year, with a snowbound February decline of 0.7 percent in output offsetting the modest January gain of 0.6 percent.

"February was disappointing, but the geographic pattern underlying the index suggests this was due in large part to extreme snowfalls during the month," said Edward Leamer, director of UCLA's Anderson Forecast and chief economist for the Ceridian-UCLA Pulse of Commerce Index (PCI). "We still need much stronger growth in the PCI to get Americans back to work. To sustain at least a 4 percent GDP number for the first quarter [on an annualized basis], the March PCI has to be ... over 1 percent growth. That number will be very important."

The new index is designed to get the jump on the Federal Reserve's report on industrial production report for February, which comes out next week.

The PCI uses real-time diesel fuel consumption data from over-the-road truckers, which is tracked by Ceridian, a longtime payment services provider to the trucking industry. The index is built by analyzing Ceridian's electronic card payment data, which captures the location and volume of diesel fuel being purchased. This provides a detailed picture of the movement of products across the United States.

In an interview Tuesday, Leamer said that once the bad weather is taken into account, February's numbers suggest that there is an underlying power to industrial demand and he expects that a catch-up surge in goods moved in March will indicate that the economy is growing at about a 3 percent annualized rate during the first quarter.

"To be optimistic about jobs, we'll need at least that," Leamer said. "In the fourth quarter, we had 5.9 percent growth, but 3.9 percent was just inventory replacement. That leaves 2 percent. We need more than that. And March will tell the quarter."

Leamer said the Ceridian diesel-consumption data, collected from about 7,000 service stations around the country, constitutes a representative sample and provides a "real data, not surveys" about the movement of goods, which is a manifestation of industrial production and shipments.

The flow of commerce

"We're monitoring the flow of commerce at truck stops, and the arteries for the commercial system are the interstate highways carrying the products," he said. "It amplifies the swings in GDP and also tells us early where the economy is going."

Industrial production only accounts for about one-third of the U.S. economy. It is more volatile than the service sector, which fluctuates less during economic cycles.

All economic eyes are on month-to-month changes in industrial output, which is a guide to business spending, credit expansion and demand for goods in the aftermath of the 2008-09 recession that has given way to a fairly tepid economic recovery. Most labor economists believe that the economy won't start adding jobs significantly unless industrial output starts growing at a 3 to 5 percent annualized clip.

Back testing of the Ceridian-UCLA Pulse of Commerce Index indicates that it is a reliable indicator of industrial output. For example, the index rose in areas unaffected by February's snows, including 2.7 percent in the Upper Midwest and 2.1 percent in the Pacific region.

"Goods have to be transported for the economy to grow, so when snowstorms bog down that flow, it is reflected in our index and in the overall U.S. economy," said Craig Manson, senior vice president and index analyst for Ceridian.

Ceridian analysts came up with the idea after they realized how closely diesel consumption predicted economic output. They took it to economists at Boston's Charles River Associates, who referred them to UCLA for research and validation of the index as a leading-edge indicator.

More information on the Ceridian-UCLA Pulse of Commerce Index is at www.ceridianindex.com.

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com