Some observers eager for an insightful edge on the
economy forgo readouts and graphs, favoring instead men’s underwear,
women wearing only underwear and the Super Bowl.
Oddball economic
indicators abound. Many more seemed to be coined during the financial
crisis, a period in which economists wanted as much insight as possible
about the market’s ills.
Leave it to the professionals? If the
past is any measure, these zany precursors are as good as any chart
worshiper’s divinations. What’s more, the ones that tend to be most
accurate signal a bull market ahead.
Among
the most useful signs: coupon usage. When the economy is bad, shoppers
look to save anyway possible. Things get better, coupon demand
decreases. The volume of coupons rose until 2010–peaking at more than
178 billion coupons just for consumer packaged goods. That’s about 570
coupons for each American. Coupon issuance then slackened in 2011 and
2012. Volume was off 8% through last June. True, you can argue the
recovery has roots in 2010, but it only recently picked up any
speed–just as shoppers seemed less reliant on coupons. Psst. No one tell
Ron Johnson at J.C. Penney.
There are other indicators with
decent records. Help-wanted ads act as a measure of employment. Diapers
offer a signal of consumer strength. As do the proceeds from the Napa
Valley Wine Auction. All three show recent increases.
Even the
Sports Illustrated Swimsuit Edition
and the Super Bowl hold up, though perhaps they’re more suited for the
rabbit-paw owners among us. Bespoke Investment Group research concluded
an American on the nudey cover almost always portends a bull market.
Good news! Supermodel and Michigan native Kate Upton is back on the
cover this year. And as for the Super Bowl, a winner from the old NFL
(today’s NFC division) suggests the market will increase. How accurate
is it? About 80%. More good news. The Baltimore Ravens, which dates back
to the old division in Cleveland, captured the 2012 crown.
Other
indicators haven’t proven as useful. Lipstick and cosmetics sales, for
example, have trended higher for a decade, through at least a handful of
recoveries and recessions. Another example, divorce rates, lack a clear
correlation. Still others point to the Hot Waitress Theorem: Attractive
females who’d normally work as models or put out their shingle as
starlets instead turn up as Hooters hostesses. To us, this one requires
much more extensive field research before a credible conclusion.
Here are 10 quirky economic indicators:
1. Super Bowl Winner
TIMOTHY A. CLARY/AFP/Getty ImagesIndicator Explained: Root for the NFC Division team. A win from an old NFL team (today's NFC)
portends
a market increase for the rest of the year 80% of the time. Trend
stretches all the way back to when the AFL and NFL played for the Vince
Lombardi Trophy.
Bullish Or Bearish In 2013?
Bullish. This is a bit confusing, but it's because this year's champs,
the AFC Division Baltimore Ravens, were actually a NFL team in
Cleveland.
2. Coupons
Indicator Explained:
When the economy is bad, shoppers look to save any way possible. Things
get better, coupon demand decreases. The volume of coupons rose until
2010 – peaking at more than 178 billion coupons just for consumer
packaged goods. That's about 570 coupons for each American.
Bullish Or Bearish In 2013?
Bullish. After demand hit highs in 2010, coupon volume has fallen.
Coupon issuance was down about 8% through last June (the latest figures
available).
3. Sports Illustrated Swimsuit Edition
REUTERS/Carlo AllegriIndicator Explained: Bespoke Investment Group research has proven that an American on the nudey cover portends a bull market.
Bullish Or Bearish In 2013? Bullish. Supermodel and Michigan native Kate Upton graced the cover again this year.
4. Men's Underwear
AP Photo/H&MIndicator Explained: Rarely seen, rarely replaced. When men start shopping for these long-lasting garments, consumer confidence seems higher.
Bullish Or Bearish In 2013?
Bearish. Men’s underwear was 3% of the overall menswear industry in
2008. It has since shrunk to 2.2%, and it is expected to contract
further during the next five years.
5. Divorce Rates
Indicator Explained: Financial problems strain a marriage, and make it more likely to break apart.
Bullish Or Bearish In 2013? Unclear.
The latest accurate figures are outdated (from 2009), but show an
overall decrease in divorce, regardless of the economy.
6. Help-Wanted Ads
Indicator Explained:
More help-wanted ads, more demand by employers. This means employers
are hiring, likely a sign of greater business and consumer spending.
It’s a measure valued enough to be tracked by the Conference Board,
which distributes some of the most widely read reports, like the
Consumer Confidence Index and Leading Economic Indicators Index.
Bullish Or Bearish In 2013? Bullish. There were more than 5 million help-wanted ads posted in January, up 15% from a year earlier.
7. Napa Valley Wine Auction
AP Photo/Eric RisbergIndicator Explained:
Held in luscious Northern California, samplings of prime vintages and
dainty finger-foods help pry dollars from the attendees of this annual
event. During more prosperous times, the event raises more money. A 2003
study by wine industry consulting firm Motto Kryla Fisher found
overwhelming correlation between increases in auction proceeds and the
Dow Jones industrial average.
Bullish Or Bearish in 2013?
Bullish. The auction took more than $8 million last year, up from $7.3
million a year earlier. This year’s event will take place in May.
8. Lipstick
Indicator Explained:
Leonard Lauder is something of a wannabe economist, in addition to
being a former executive of the eponymous cosmetics company. He posited
that women tended to buy more lipsticks and makeup during tough economic
times—a more cost-conscious way to maintain a glamorous appearance
than, say, splurging on a new handbag.
Bullish Or Bearish in 2013? Bullish.
Lipsticks sales are indeed set to rise again this year. But lipstick
sales have seemed fairly recession-proof in the last two decades. Plus,
not all cosmetics companies reported results in the past few years,
making it hard to draw a clear correlation.
9. Diapers
Indicator Explained:
Parents in past recessions went without and still managed to keep up
spending on their children. Not so during the latest financial crisis.
Diaper sales fell during the financial crisis, as seemingly essential
goods became luxuries.
Bullish Or Bearish In 2013?
Bullish. The diapers industry is expected to continue to grow, reaching
$5.4 billion. For perspective, the industry totaled more than $5.7
billion just four years ago.
10. Hot Waitresses
AP Photo/Matt YorkIndicator Explained:
In hard times, attractive females who'd normally work as models or try
to put out their shingle as starlets instead turn up as Hooters
hostesses.
Bullish Or Bearish In 2013? Unclear. We suggest you perform your own field research on this. Lunch break!