Let us talk about economic indicators

Traditional ways of looking at in which direction the economy is heading includes consumer confidence index, purchasing manager index, housing market, and job creation. Forget the old school way of looking at the economy for a while and consider some slightly more unexpected or unorthodox ways of predicting the economic future.

Predicting the future has been a sought after-ability for mankind throughout history. Those who have been able to see what is coming ahead (or just luckily got their predictions right) have been praised as oracles, gaining substantial credibility and respect among their surroundings. From the ancient prophets and philosophers, to shamans, scientists and today’s economists who all have been considered to be particularly wise with an ability to predict and see the world from a different view. So let us have a look at a few indicators of economic development you can use when feeling a little less traditional.

1 Divorce rates escalates

It is not that people stop loving each other in times of economic progress. If you are getting a divorce you were probably not right for each other in the first place. It is rather as simple as that divorces or split-ups are costly, when the economic future looks better and more promising you will be more confident about making it on your own and to take the leap and leave your significant other. During the financial crisis in the late 00s the divorce rate decreased by 7 % and in 2011 when the US economy started picking up some pace divorce lawyers claimed an increased firm activity of 20-25 % compared to the recession period.

2 Rise in male underwear sales

Whether this is a result from the previous indicator or not remains unanswered, but it is a fact that when times are looking brighter, men will buy new underwear. It could be claimed that men see underwear as a luxury good that will be more bought as income rises. Former Federal Reserve chairman Alan Greenspan used this example when highlighting the economic downturn. In the wake of the financial crisis in 2009, men’s boxers and briefs sales fell with about 2,5 %. In the recovery year 2011 sales went back up 5,2 % with men again putting a priority on wearing fresh underwear.

3 Lower college enrolment

When times are getting better and more jobs are available, it is tempting to rather take a job than to make a wearing investment in a college education. In 2010-2012, US college enrolment fell with about 2 % with increased opportunity cost of going to college when the probability of getting a well-paid job without college education increases, as it does when the economic outlook gets better. This might be a regretful decision though as a college education still pays in the long run with greater probabilities of a more rewarding job.

4 The grass becomes greener

Is the grass greener on the other side? The economist says ‘it depends’. In times of economic recovery the grass seems to indeed be greener. Like point 1 indicates people are more prone to take life-changing decisions when the economy is improving, if the economy is getting better why should people not think they can do better? Besides getting divorces, numbers are telling us that individuals to a larger degree will quit their jobs in times of economic prosperity. They will also leave their hometown for new opportunities rather than the other way around as individuals will during recessions. Thus, it seems to be that the question of the color of the grass is more frequently asked and acted upon when the economy is about to improve.

5 Ice Cream index

While the economy is heating up, people are cooling down. Restaurant visits in general and the choice of having dessert in particular are sensitive to the economic development. When the economic performance looks more promising, people tend to indulge themselves with dessert after their meal. Look after ice cream sales numbers if you want an unconventional way of predicting where the economy is heading. And whether any of these indicators will settle as a trustworthy indicator and compete with the traditional indices of measuring the health of the economy is a question for the future to decide.

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