Reality Index · category
A bottom-up basket of what households actually spend to get around — vehicles, fuel, insurance, upkeep — priced at transaction cost. It runs well ahead of CPI.
Transportation is the second-largest bucket in the Reality Index (17.3% weight). We price it bottom-up: a fixed-weight basket of the components households actually spend on — used vehicles, new vehicles, gasoline, insurance, maintenance, and public transit — each measured by its best transaction series and weighted by BLS Consumer Expenditure shares. On that basis transportation has grown 4.72× from 1980 to 2025, well above CPI All Items at 3.91×.
The gap comes from where CPI looks away. CPI hedonically adjusts vehicle prices down — its new-vehicle index shows just 2.02× since 1980. Priced at what people actually pay, used vehicles (Manheim wholesale) have run 4.98× and new vehicles (KBB transaction prices) 2.57×. Add insurance, which has climbed 10.9× over the same period, and the real cost of getting around has far outpaced the official measure. Gasoline is the volatile swing factor — it can dominate any single month, but over 45 years it has roughly tracked the broad index.
Each card below links to the full chart page for that item — including retail dollar series, BLS CPI subindex for that category, and the long-history backstop where available. Multiples shown are 1980-anchored unless the underlying data series doesn't extend that far back.
Monthly refresh. The transportation bucket updates each month from the same components: Manheim MUVVI and KBB ATP for vehicles (Cox Automotive) plus BLS gasoline, insurance, maintenance, and public-transit subindexes. When a component’s current month has not yet published (KBB posts on a one-month lag), the latest available month is carried for that leg only.
Bottom-up construction. A fixed-weight basket of transportation components, each priced by its best available transaction series and weighted by BLS Consumer Expenditure Survey (2023) ownership-cost shares: used vehicles 23.5% (Manheim Used Vehicle Value Index, 1997–present; CPI used-car index before), new vehicles 16.3% (Kelley Blue Book average transaction price, 2012–present; CPI new-vehicle index before), gasoline 18.6% (BLS CPI gasoline), insurance 13.7%, maintenance 7.6%, public transit 8.3%, and other vehicle expenses 12.0% (all BLS). Each leg is indexed to 1980 = 100 and combined at these weights. Using transaction prices for vehicles — rather than CPI’s quality-adjusted indexes — is the core methodological choice: it restores the real price households pay to replace a vehicle.
Insurance-weight sensitivity. Insurance is the most sensitive weight in the basket, and it is disclosed. Holding everything else fixed and moving the insurance share from 10% to 17% shifts the 2025 transportation multiple from 4.44× to 4.97× (4.72× at our 13.7% base weight). Motor-vehicle insurance itself is not mismeasured by CPI — the issue is how much weight it carries in the basket. We use the CES ownership-cost share.
Vehicle overlays and the CPI gap. CPI hedonically adjusts vehicles — its new-vehicle index sits at 2.02× since 1980, because it treats a more-equipped car as partly a “better product” rather than a higher price. Priced at transaction cost, new vehicles (KBB) run 2.57× and used vehicles (Manheim wholesale) 4.98× — the pandemic-era used-vehicle spike that CPI’s methodology dampens. Gasoline is volatile and can swing the bucket in any single month, but over the full period it roughly tracks the broad index. The updated basket replaces the earlier AAA “Your Driving Costs” composite (3.92×), which is why the headline transportation figure moved up.