Economic Forecast

Ok, so you can study common economic indicators like the GDP, CPI, unemployment, inflation, deflation, housing markets, bulls and bears to determine if our economy is heading in the right direction. You can try to decipher stats and earnings to see if they are rising or falling. But I prefer to take a different approach. Perhaps you could call it the “Main Street” approach as opposed to the “Wall Street” approach to the hopeful economic rebound.

My first everyday man indicator: the SBUX Index or spelled out, the Starbuck’s Index. Jonathan Last, of the Philadelphia Inquirer explained it best, “Plot Starbucks’ stock price against the Dow Jones industrial average and you see that over the last four years, Starbucks has anticipated the market at nearly every turn. Starbucks’ stock started heading north in 2005—five months before the rest of the market started climbing. Starbucks began its decline in late 2006, just as the outlines of the recession were emerging on the horizon. And Starbucks’ stock dropped through the floor nine months before the Lehman Bros. Holdings Inc. crash sent the rest [of] the market tumbling.” Today, Starbuck’s is on the upswing at $20.03 a share, an increase from a horrid low of $7.06 at its deepest losses of the recession.

Then there is always what Stephanie Rosenbloom of the the New York Times calls the “Clip-and-Save Renaissance.” Rosenbloom reported, “Coupon redemption ticked up 10 percent in the fourth quarter of 2008, compared with the period a year ago—the first jump in coupon redemption since the early 1990s. In the first half of this year, coupon redemption climbed 23 percent.” So, in looking for recovery, we should be eyeballing coupon clipping trends to see where they are in the next few quarters.

Then there is the Big Mac Index, which measures the strength of American currency against international currency. Or look to The Appalachian Trail Hikers Index (ATHI), which follows the number of hikers who left from Georgia en route to Maine. This year’s uptick explained, more people had time on their hands and quite frankly, walking is free. Let’s hope unemployment numbers start to decrease and I’ll bet ya the ATHI will, too.