My ears perked up when I interviewed Philip Germann for the LM Industry Pulse report. The owner of GreenLawn Specialists in Lewis Center, Ohio, said homeowners are having a hard time getting landscape professionals to return their phone calls.
It reminded me of an economic indicator, albeit unscientific, I read about a few years back: the Speed at Which Contractors Return Calls Index. According to New York magazine, if homeowners get a callback within 24 hours, the economy’s in a recession. The idea got me thinking about other unconventional indicators economists watch to get a sense of the economy, so I tracked down the latest figures for a few of them.
The men’s underwear index—Because they’re a necessity, men’s skivvy sales are relatively stable. During poor economic times, men hold out on buying new pairs. Thus, if men’s underwear sales are up, the economy is in good shape. A brief look at the current data shows the men’s underwear bottoms market grew 3 percent, reaching $2.7 billion, in the 12 months ending in September, according to research firm The NPD Group.
The Dow Jones U.S. Economic Sentiment Indicator (ESI)—The ESI, which ranges from 0 to 100, projects the health of the U.S. economy by analyzing coverage of 15 major U.S. newspapers, using an algorithm to look for positive and negative sentiment about the economy in every article. The ESI checked in at 51.7 in October, down from 53.6 in September and 54.5 in August. That’s compared with a 2013 average reading of 53—and an all-time a low of 22.2 in November 2008.
Corrugated box index—Former Fed chief Alan Greenspan reportedly tracked corrugated box sales to clue in on demand for consumer goods. It’s a telling metric because most nondurable goods are shipped via corrugated packaging. (You’ll have to excuse the jargon. As a former editor of trade pub Paperboard Packaging, I’m forbidden to use the layman’s term “cardboard.”) What do the current numbers say? U.S. box demand will grow at 2.1 percent per year during 2015 to 2016 after being stuck at less than 1 percent per year since 2011, according to a report from industry authority RISI.
And there are many more unusual bellwethers, like the RV Index (recreational vehicle makers reported 10.5 percent year over year growth for September, the highest totals in seven years) and the Hemline Indicator (fashion forecasters are calling for midlength skirts to be on trend for 2015). When you combine the results of all these what you get is… a mixed bag of modestly good news that’s probably more entertaining than it is useful.
That said, the overall theme I take away from these offbeat indicators and from putting together the 2014 LM Industry Pulse report is genuine optimism about the way things are going but a real concern about becoming complacent. Business owners don’t want to oversell how good things are to themselves or to anyone else. There is no “irrational exuberance” like the pre-recession mid-2000s nor is there doom and gloom. There’s a strong focus on doing the hard work necessary to keep their businesses in the black.
