Employment is up, and factories are hiring!
You have read it in black and white: the economy is improving: Factories are hiring. Adding 200,000 jobs in December cut the unemployment rate to 8.5 percent. Consumer confidence is rising, and cars are selling again.
Meanwhile, corporate profits hit a record $2-trillion a year, and since the cataclysm in 2008, real gross domestic product, the broadest measure of goods and services, has grown for more than two years.
These economic measures are broad, ubiquitous and reliable, but there are other ways to measure the economy. If you poke around, you’ll find economists — on Wall Street and Elm Street alike — with their own idiosyncratic economic indicators.
Like the GDP and unemployment rate, many are less forecasting tools than measures of the current economy. That may diminish their prognostic value, but not their human-humorous-interest value.
To stay or to vacate?
Vacations, however necessary, can be expensive, and so when the economy tanked in 2008, we began to hear about the cost-cutting “staycation.” By taking time off from work (assuming we had a job…) without leaving home, we could enjoy friends, family and local attractions: parks, museums, lakes and beaches.
We could, in other words, enjoy many of the benefits of a vacation while ducking the hefty price tag. Staycations can have pizazz: would you rather be taking off your shoes in a frenetic airport or building a tree house with the kids?
We failed to find anybody who studies staycations, so the best we can say about their merit as economic indicators is that past performance is no guarantee of future success; read the full prospectus before investing!
Vacant at home
It doesn’t take a Rhodes scholar to deduce from foreclosure stats or photos of abandoned houses that housing remains a black hole in the American economy. But like the staycation, a foreclosure boom follows a sour economy, and is more informative about the immediate past than about the immediate future.
We were, however, intrigued to learn that foreclosure could be a disease vector. Clouds of mosquitoes are breeding in abandoned ponds and swimming pools at foreclosed homes in Arizona.
That gives us another reason to hate skeeters, even if their whine is the sound of love.
State-by-state foreclosure rates
Sports: No rush to the finish line
Pro-sport tickets are not cheap, so a full stadium must signify a healthy economy. But it ain’t necessarily so, says Andrew Billings, who studies broadcasting and sports at the University of Alabama. “People often get a flawed picture from simply going by attendance figures. It depends on the sport.”
In the National Football League, he notes, “the majority of stadiums sell out, and demand far exceeds supply.” Before a sick economy leads to empty seats, he says, it deflates ticket prices on resale markets, “but you will still see a full stadium, and may think the economy must not be too bad, even if the demand is cut in half.”
And don’t bother counting duffers at a private golf course, either, Billings says. A full golf course “is not always a straight-off indicator of prosperity,” because the major expense is the cost of membership. “For many people, once they have bought the membership, the costs are sunk, and golf becomes the cheap option for entertainment.”
When money is tight, he says, “They may be playing twice as frequently because it’s already paid for.”
Big screen, big sales, bogus economic indicator?
You might think sales of pricy electronic goods, including those “mine-is-bigger-than-yours” TVs, would closely track prosperity, but Billings says they “may be another misleading measure.”
Many of those giant video screens, more suited to aircraft hangers than living rooms, are bought to watch sports, and looking at the full economic picture reveals the folly of the sales = prosperity equation, he says.
Consider the cost of season tickets for big-league sports — up to $20,000 for a seat behind home plate at the New York Yankees. When times get bad, Billings says, “The buyer may think, ‘Why don’t I get a $2,000 TV and the major-league baseball package? Once you add in parking and food, sports can be very expensive, and that makes the flat screen look pretty cheap.”
Although another flat-screen sale may contribute to the image of prosperity, Billings says, this fan “has really cut their budget to avoid going to the stadium.”
How do we get a measure of economic activity in the long, dark epoch before the invention of the GDP or the flat-screen television? In the 14th century, during the death throes of the Byzantine empire, the church was an economic engine and a wealth center. If you bought a marriage license, you paid the church, which also owned buildings, even entire communities.
Because churches hold some of the best documents from the period, some scholars have proposed using records of church wealth as a proxy for economic development — or decline — during this benighted epoch before the spreadsheet was envisioned.
With the possible exception of unwrapped broccoli from a local farm, everything you buy creates garbage, and the garbage disposal system is always affected by economic slowdowns.
But we were surprised to hear that garbage can offer almost a real-time economic readout. According to Edward Humes, author of the forthcoming book Garbology: Our Dirty Love Affair with Trash, “Until the housing bubble burst, the largest landfill in the country, by intake, was Puente Hills in Los Angeles County, which was taking up to the legal limit, 13,000 tons per day. This was cut in half after the housing bubble burst. Home construction and demolition debris fell as construction stopped, and people started buying less stuff.”
Construction fell so quickly, Humes says, that “Landfill operators probably saw [bad economic] things coming ahead of a lot of the rest of us.”
Even “durable goods” can quickly start bulking up the garbage stream, he says. “So much of what we buy is pretty ephemeral, even the stuff defined as durable goods must last just one year. A lot of it is designed to be thrown away; not fixed. The age of the TV repairman is long behind us.”
Garbage tells us about more than just economics, Humes adds. “It’s a little scary, one of our greatest exports is trash. We used to make things, and now we make trash.”
Although high garbage flows correlate to prosperity, Humes says the linkage cannot last forever. “Every culture figures out” that wasting resources is not a long-term solution, he says. “Suddenly, when resources are scarce, humans get more conscious of how much they have wasted, but by then it’s too late.”
Night lights, big city
Can lights at night, as seen from space, measure a region’s economy? After all, lighting requires bulbs, generators, energy and wires, so the argument has face validity. But a 2011 study returned mixed results. Night lights were a useful gauge in 25 percent to 33 percent of counties in the United States (excluding Alaska and Hawaii). In India, night lights gave a useful picture of local GDP in a “very small number” of districts.
And in China, fewer than 10 percent of districts showed a significant correlation between night lights and GDP. One reason: light from the intense coastal urbanization overwhelmed the satellite’s sensors and could not be measured accurately.
Alan Greenspan, who ran the Federal Reserve for oh-so-many years, was said to favor sales of men’s underwear as an economic indicator. His theory: When times get tight, men decide to forgo the pleasure of a new pair of briefs or boxers.
We were unable to unearth evidence for this notion, but wish to ask two follow-up questions: Do sales of women’s underwear convey an economic message? And how do you know?
Stick with lipstick?
If men can withstand the urge to buy boxers and briefs, women apparently can’t cut back on “small indulgences” like lipstick. In 2001, the chair of Estee Lauder coined “lipstick index” to explain why lipstick sales rise during a bad economy.
Going to war
For some, the military is a job of last resort, and so the number and quality of new recruits offers a proxy for economic conditions.
But military recruiting ads may be just as telling as the numbers. In 2009, the New York Times described a new Marines ad showing “men crawling through mud and under barbed wire, being smacked in the head with padded fighting sticks, vomiting after inhaling tear gas and diving, boots and all, into a swimming pool.”
With so many potential recruits in the job market, the ad didn’t bother soft-selling the rigors of Marine life.
Recouping the coupons
When pressed for coins, why not cash in on those coupons that clutter mailboxes and newspapers? In hard times, coupon redemptions do rise, according to a company that processes them.
Skirting the economic reality?
If we can believe QI, a quiz show from the United Kingdom, long hair and short skirts are both signs of prosperity. Hey, we tried, but failed, to track this revelation back to a legit study, but still give thanks to reader “St Ga” for the suggestion, and for an elegant mix-mastering of cause and effect: “If the government makes short skirts & long hair compulsory for EVERYONE will the economy improve? :)”
- Could garbage explain stocks and bonds? ↩
- Can we trust any of these correlations? ↩
- Economic indicators, ↩
- Index of leading indicators to change. ↩
- Really, the makeup of economic indicators is changing. ↩
- Which economic indicators best predict presidential elections? ↩
- Leading economic indicators riseeven more than had been predicted. ↩
- GDP and jobs: What’s going on? ↩
- Other economic indicators suggest that the recovery is getting worse. ↩
Tags: Andrew Billings, construction, economics, Edward Humes, football, foreclosure, garbage trash, landfill, light pollution, sports business, stock market, television TV, underwear, unemployment, vacation