Reading Tea Leaves
Most people become confused when they listen to economist speak. One of the toughest economists to comprehend was Alan Greenspan former head of the Federal Reserve. His replacement, Ben Bernanke, is also very hard to follow. The use of useless “economic indicators” drives me up the wall such as the “lipstick sales index”. Here are a few interesting indicators. Enjoy
- Presidential approval ratings. When they go down, stocks go up. According to Ned Davis Research Inc., in weeks when the presidential approval rating was below 50%, since 1959, stocks rose at an annualized rate of 9.2%. In weeks when the approval ratings were above 65%, the Dow rose at a 2.6% annual rate.
- Boxes. The fibre Box Association says that demand for corrugated boxes is a good leading indicator for the U.S. manufacturing and notes that almost all items that go into manufacturing-from raw material to finished goods-have to be put into a box.
- Vegas visitors. Las Vegas is a major destination for both leisure travelers and conventioneers-when times are good. When times are bad? People still go to Vegas to drown their sorrows at the table, but the conventions don’t necessary follow.
- Fast food. The burger-and –fries combo is a low cost, completely discretionary decision. When fast-food sales tick upward, the economy is usually also trending up.
And then there are the really more obscure economic indicators: immigration applications, the price of copper, the Colliers parking survey, Harvard B-School Graduates on Wall Street, Mexican home mortgages, Central Appalachian coal futures, and the Baltic Dry Index. You can find them all in the archives of the “Moneybox” column, written by Daniel Gross, at Slate magazine: www.slate.com
Interesting Facts:
50…Average percentage rise in value of 401(k) accounts for workers who saved consistently between 1999 and 2005
46,326…Median U.S. household income, in dollars, for 2005, a 1.1 percent inflation-adjusted gain from 2004