It's Arnold v. the 'U-Haul indicator'

[BikeDeck]

It's Arnold v. the 'U-Haul indicator'
Popular economics

The cost of renting a 26-foot U- Haul moving truck for a one-way trip from Los Angeles to Las Vegas is US$1,080. The same move in the opposite direction costs only US$133.

To economist Brian Wesbury, the difference in cost is an accurate snapshot of the economic climate in California: People are moving out of the state as opportunity diminishes and few want to move into a slumping economy.

A one-way U-Haul move from Los Angeles to Phoenix costs US$837 while the return costs US$116. San Francisco to Boise: US$2,024. Return trip: US$310.


Full Article:
http://www.nationalpost.com/financialpost/story.html?id=8CEAAF35-74A0-43B8-A38C-E2982A3B3533

CALIFORNIA EXODUS: The cost of renting a 26 ft. U-Haul truck one way:

Los Angeles to Las Vegas: US$1,080

Las Vegas to Los Angeles: US$133

Los Angeles to Phoenix: US$837

Phoenix to Los Angeles: US$116

Los Angeles to Denver: US$1,908

Denver to Los Angeles: US$498

San Francisco to Boise: US$2,024

Boise to San Francisco: US$310

Chicago to Detroit : US$419

Detroit to Chicago: US$449

Source: Griffin, Kubik, Stephens & Thompson Inc.


Discuss...

[KAZ]

1. Hmm.

Chicago to Las Vegas - $2399
Las Vegas to Chicago - $1087

[Richardo]

2. Gather 'round, lil' DUers, and let Uncle Richardo explain backhaul pricing

If your equipment moves from a high-use area like California with its 30 million people, to a low-use area like Boise, ID, you have to pay (or discount) to get that equipment back to where it gets used more efficiently. (This is further illustrated in KAZ's post above)

Note that rates between large cities like Chicago and Detroit are much more in balance because the use rates in those two cities is likely a lot more similar than it is in more disparate points like LA and 2nd-tier cities Las Vegas or Phoenix.

[fob]

4. Excellent Richardo! So with this information in hand what say you

regarding "Economist" Brian Webury, who doesn't seem to grasp the concept as finely as yourself.


To economist Brian Wesbury, the difference in cost is an accurate snapshot of the economic climate in California: People are moving out of the state as opportunity diminishes and few want to move into a slumping economy

May I state my reaction to Mr. Wesbury's inference. He is full of shite! It is truly a rare occurence for one to make such a giant-sized ass of oneself with such a glaring lack of common sense and apparent training in one's stated area of "expertise". Nice work Brian. I only hope to hear Brian one day tackle supply-side economics, perhaps he could actually come up with a way to show how it "works".

I humbly await your evaluation.

[Richardo]

11. A better indicator, if one insists on looking at U-Haul rates,

...would be to see if the disparity in head-haul/back-haul rates increased or decreased over time.

If the difference increases, that could indicate that demand in the origin city (LA) was truly increasing -- and you may (I say MAY) attribute that to economic decline if other indicators support that. (What if the economy is so GOOD that more people are moving to better houses within the LA area?)

And of course you could just compare the NUMBER of one-way, out-of-state rentals to the number of one-way, into-state rentals, and forget the price spread.

Transportation rates are based on many factors independent of "market" forces: fuel, labor availability, return-on-investment, and equipment positioning (is it where it can get a paying load?)

[trogdor]

3. Apples and oranges.

population of Los Angeles County, California: 9,637,494
Net population increase, LA County, 4/00 to 7/01: +1.2% (same as national average)
Net population increase, state of California: 1.9%

population of Clark Co., NV (where Vegas is): 1,464,653

population of Maricopa Co., AZ (where Phoenix is): 3,194,798

population of Denver Co., Colorado: 554,446

Source: US Department of the Census

It follows logically that UHaul would have more trucks going from a large metro area to a much smaller one.

I could shoot all kinds of holes in the 'people must be leaving LA in droves and leaving all those UHaul trucks behind,' but I'll leave that to the rest of you as an exercise.

[OldSoldier]

5. Check in-state rates too...

Los Angeles-Modesto (near San Francisco): $321.00
Modesto-Los Angeles: $538

[AndyTiedye]

7. Modesto Isn't particularly Near San Francisco

It is in the Central Valley, about halfway between SF and LA.

[Richardo]

8. Modesto -> LA = 335 miles; Modesto -> SF = 91 miles.

[treepig]

10. hmm, i didn't realize that modesto was larger than LA

but it must be, based on the prices you list, and the reasoning put forward in this thread

[Richardo]

12. Size does not necessarily matter. (Where have I heard THAT before?)

There may be some logistical or economic imperative that dictates that the rates are lower. For example, given its strategic location on I-5, Modesto may be a good spot to stage equipment for use in the Bay Area, Sacramento, and through the Central Valley.

[treepig]

15. just did my own analysis

ny, ny to cumberland, md $743
cumberland, md to ny, ny $284

ny, ny to portland, me $818
portland, me to ny, ny $362

ny, ny to toledo, oh $1295
toledo, oh to ny, ny $694

guess, new york is in dire economic straights, too!

so now for the final show-down

ny, ny to los angeles, ca $3069
los angeles, ca to ny, ny $3552

[alwynsw]

6. This pricing scheme has been essentially the same for years.

U-Haul "rewards" customers with lower rates to get their equipment where it's needed most. The into/out of southern California flip flop has been going on since at least the late 70's.

Made that move several times because of work, both personally, moveing business materials for reduced cost, and helping friends and co-workers make essentailly the same moves.

Hint! Anyone planning a move using a rental truck or trailer should check prices along the way. I rented a U-Haul in N.H. to go to Phoenix some time back. I saved several hundred dollars by turning the thing in and re-renting the same unit (on paper) in Indianapolis and Albuquerque. Figuring the added time to do the paperwork against my savings, I netted over $400.00 per hour!

[Clete]

9. I have found when moving,

it's easier to sell what you have and buy replacement stuff at your destination. What you really can't part with usually will fit into a small trailer that you can also rent at Uhaul for a pittance.

I found out that you really don't have to take it all with you.

[AP]

13. Won't these prices always be higher in LA and SF even in good times

because the UHAUL renters in those cities are paying higer prices for, eg, real estate. Their overhead will be higher, and they're dealing with a wealthier public.


The only way we could make sense of these numbers is if we compared them to, for example, the 1998 numbers.

And what's going to happen when Arnold makes everybody poor in CA forcing these prices to drop? Are we going to call that a success? Making people so poor that real estate prices drop through the floor and so that UHAUL has to lower their prices so much because people can't even afford to move? That isn't economic success.

[Richardo]

14. Yep - it's a spurious indicator at best...

Even idiotic, one might say. :eyes:

[PeaceProgProsp]

16. two more problems with this analysis:

UHAUL renters might not be a cross section of society. Students and lower income people use UHAUL. There are at least two tiers of movers higher than UHAUL (independant movers, large professional movers), and one or two lower (pack everything you own in a car, take a bus). These different groups might not all move in same direction, and any one going up or down doesn't tell you everythign you need to know about the economy.

Also, as noted above, why can't you just look at population growth. CA could be growing, doing well, and still sending its residents to other growing economies.

I'll predict that we're going to see lots of spurious measures of economic growth which are going to say Arnold is improving the CA economy when the truth is the opposite is the truth. If UHAUL rates go down it'll probably be because people are too poor to move, and because real estate values are tanking.

[Brian Sweat]

19. You are absolutely correct.

Professionals, people with families and anyone who has ever moved at least once before :crazy: are far more likely to have someone else do their moving for them.

[realFedUp]

17. does it cost any more to move manure?

....

[Brian Sweat]

18. For 2002 California had a net internal migration of -108,595,

a international migration of 326,917 and a net total migration of 218,322.

That is a net internal migration of .31%. That number by itself is fairly insignificant. When you consider that California is clearly a point of entry for hundreds of thousands of internation immigrants, it becomes obvious that a large portion of this .31% is made up of international immigrants who enter the country through California and then move on to other parts of the country.

Anyway you slice it, there is no way that you can say that people are leaving California in droves.

[olmy]

20. Not sure about this method, but

The I-10 from Los Angeles is what I use to drive east into Phoenix from one of it's most western suburbs. LOTS of pickup trucks with household items and furniture in back, Uhauls with the California drivers plates, and in the business areas of town, many California plates.