Wednesday, November 30, 2011

Economic Indicators

  On my vacation last week, I hadn’t driven at all until Black Friday when I drove 2 miles to Staples so my son Ben could get a 23” monitor for his computer. If you happened to go to the Marshalltown,Iowa Staples on Black Friday, you'd have to think the economy was awful since the place was mostly empty and the only way they could even simulate a crowd was to make everyone wait in line forever to get out of there.

Not much of a crowd at 6:15 am on Black Friday at the Marshalltown, Iowa Staples.
I got up early, but managed to catch up on my sleep waiting in the line.

  On Saturday I drove 55 miles to play chess at Zanzibar’s in Des Moines. On my way back from Des Moines last Saturday, I saw that gas at the Git ‘n Go in Bondurant was 2.98 a gallon. I was not prepared to see a price under $3 a gallon and sped past the station, but recovered my senses to make a left turn at the next light to fill up at Casey’s for the same $2.98 a gallon. Both gas stations in Bondurant always charge a penny less than gas in Des Moines and gas was $3.15 in Marshalltown so it seemed like a bargain.

  I think the economy must be pretty bad for gas to be less than $3 a gallon and even though the low gas prices will spur the economy, increased economic activity will cause more oil consumption, which will raise the price of gas, which will choke off economic recovery. A big part of the low gas prices is the economic problems in Europe where the governments of Greece, Italy, and Spain are having a hard time borrowing the money they need to pay for their deficit spending. This has made the dollar more valuable than the Euro and keeps the price of commodities that are controlled by third parties like gold and oil high low in dollars and high in euros.

Gasoline is $2.98 a gallon and milk $3.79.
Why doesn't anyone care how much a barrel of milk costs?
Are we running out of cows?

  Despite the low price of gas, the price of food continues to go up and up. After I filled up my car with $3 a gallon gas, I went into the Casey’s coffee refill. I paid 75 cents for 20 ounces of coffee which works out to 6 dollars a gallon. I also checked out the price of milk and it was $3.79 a gallon. Maybe instead of ‘Drill, Baby, Drill’, the republicans could chant ‘Moo, Baby, Moo’ or maybe even ‘Eat Mor Chikin’ if they can get the rights. It shouldn’t be too surprising to see the price of milk, hamburger, and meat so high when we are using the corn the cows would be eating as fuel.

  The stock market seems to be right in the middle of where it has been over the last year, making me think the economy is balanced like a see-saw that can’t decide which way to tip. Intel gained 30% between September and November to hit a multi-year high and just as quickly shed 10% in the last 2 weeks. The unemployment rate should be a good economic indicator, but it has become politicized so much as to be useless. When the unemployment rate goes down it is either good news because more people have jobs or it is bad news because people have given up on even trying to get a job and are not counted as unemployed. Likewise, when unemployment goes up it could be a bad sign because companies are laying off or really good news because the people who brought the rate down by stopping their job search are back looking for jobs. It reminds me of the George Orwell novel ‘1984’ where the chocolate ration is decreased from 30 to 20 grams a month and the ‘News Ministry’ busily changes all references to the 30 gram ration in order to praise Big Brother for increasing the ration to 20 grams.

  I’m trying to decide which way the economy is heading and since the standard indicators aren’t being very helpful, I’ve fallen back on the 3 best economic indicators I know of, all of which can be discerned with my eyes and ears. Here are my findings:

  My number one economic indicator is the LCI (Loose Change Index). This is the indicator my father taught me, which is how much loose change can be found lying around. 6 months ago, I found pennies laying on the ground during our walks with Daisy and Baxter on a regular basis, but over the last month finding loose change has been the exception rather than the rule. To me, this is a downward economic indicator since when times are good no one bothers to pick up any change that falls out of their pockets but when times are bad, not only do people have less change to spill, whatever coins do manage to hit the ground are quickly scooped up by the rest of us.

  My next indicator is the CI (Can Index), which has 2 separate measures. First is how many cans and bottles I see laying around on the street when we walk Daisy and Baxter and the second measure is how many people we see trolling for cans by surveying the streets and garbage cans on these walks. This indicator is giving me mixed signals. We’ve seen a normal amount of cans and bottles on the street waiting for their deposit to be claimed, but other than Shirley there hasn’t been anyone looking for the cans or bottles. I see Shirley picking through the garbage cans on Main Street almost every Sunday and haven’t seen her pull out a can in a month.

Loose change, cans, and bottles seem to be in short supply, but my crack researchers report that the supply of thrown away trash on the streets of Marshalltown is never ending. The rising Garbage Index indicates increasing disposable income to go along with the disposable merchandise.

  My third and last indicator is the GI (Garbage Index). This is how much garbage I see on the street when I’m walking the dogs. Since Daisy and Baxter find plenty of fast food wrappers, Chinese takeout trays, and chicken and rib bones on the street, this indicator leads me to believe the economy is picking up. This week they even found a Walgreen’s cup on the corner and a tube of toothpaste by the house a block away that has a garage sale every weekend. When the pigs of the world not only able to afford fast food wrappers to litter the landscape, but they can also throw away household supplies, that is a sure sign of plenty.

  My predictors are as mixed as the mainstream economic indicators with 1.5 up and 1.5 down, but I’m predicting an economic down turn based on a new store that has opened on Main Street called Valuables 4 Cash. It is ostensibly a coin shop, but will also be buying and selling gold and silver jewelry. The owner stated that he was drawn to the location by its close proximity to the ‘Purple Cherry’ yogurt shop. I can see all the little kids stealing grandma’s earrings, selling them at ‘Valuables 4 Cash’, and then getting a yogurt with M & M’s or Reese’s Pieces across the street.