What does the price of a bacon cheeseburger tell you about the state of the economy? Perhaps the Big Mac contains the “special sauce” to decoding the current consumer condition — or maybe it’s one of the many other oddball economic indicators that take into account everything from nail polish to men’s undies to corpses.
After reading this MarketWatch story that mentioned the Bacon Cheeseburger Index and being tempted to fire up the grill, we decided instead to round up this and a half-dozen other very particular indicators.
1. Bacon Cheeseburger Index
The Bacon Cheeseburger Index, or BCI, is a trademarked index created by Nicholas Colas, chief market strategist at the New York–based global brokerage Convergex.
It can be used as a relatable inflation gauge, Convergex says, simply because of how popular the sandwich’s ingredients are. Consumers all have a pretty clear idea about the price of the ingredients in a bacon cheeseburger — cheese, tomatoes, beef, bread, and of course, bacon — which means it’s ” a remarkably good measure of observed inflation – something that consumers use to anchor their own inflationary expectations,” Convergex claims.
“To understand where consumer inflation expectations are going, you would do well to consider a basket of commonly and frequently purchased goods, Convergex says. “That, after all, is what anchors inflation expectations for many consumers.”
2. Big Mac Index
We continued down the burger path when we found the Big Mac Index, which something The Economist came up with in 1986 to measure purchasing price parity (PPP) between two currencies. Simply put, PPP is when it costs exactly the same to buy goods in one country as it does in another, due to market exchange rates. It “seeks to make exchange-rate theory a bit more digestible,” The Economist said (via Wikipedia).
It also might make you hungry.
3. The Lipstick/Nail Polish Index
If Americans are buying more beauty products, does that mean the economy is in rough shape? Leonard Lauder, chairman of the board of Estee Lauder, thought so, when he introduced the concept of the “Lipstick Index” to describe an uptick in sales of cosmetics during the recession of the early 2000s. The idea here is that women will limit themselves to cheaper, smaller purchases like lipstick when money is tight, instead of splashing out on more expensive items like shoes.
In 2011, a Sally Hansen executive said he thought the lipstick index needed a new name — the nail polish index.
“(Estee Lauder Chairman) Leonard Lauder talked about the lipstick index…Today, I believe it should be called the nail polish index,” Bill Boraczek senior vice president of Global Marketing at the company said at the time, in an attempt to explain why nails were the hot “accessory” of the season.
“The recession and innovation have re-energized the category and clearly played a part in the resurgence,” he noted of the popularity of nail polish.
4. The Men’s Underwear Index
Though you may have no occasion to dwell on the idea of men’s underwear in your daily life, some economists think it’s a pretty good way to assess the health of the economy. The idea here is that when men are feeling good about the economy, they start buying new underwear, sparking the start of economic recovery.
It’s not measured by the government, but Alan Greenspan, the former chair of the U.S. Federal Reserve is a big fan, MarketPlace noted recently. Again, we don’t usually find ourselves writing about Alan Greenspan and underwear together, but sometimes it happens.
5. The Unclaimed Corpse Indicator
The idea behind this macabre economic indicator is that funerals are a costly endeavor, so some family members will simply never claim the bodies of their deceased loved ones, thus, prompting the city or state to foot the bill.
An example of this, Business Insider notes, comes from Detroit in 2009, when nearly a third of residents were out of work. That year, the city reported a massive increase in the number of unclaimed bodies at its morgue: state payouts for burials almost doubled over a two-month period compared to the year earlier.
Los Angeles experienced a similar kind of effect as well that same year, when the Los Angeles County coroner’s office saw a surge in the number of unclaimed bodies because of economic hardship. The coroner’s office reported 36% more cremations that were done at taxpayers’ expense in the past fiscal year compared with the previous year, 712 versus 525, the Los Angeles Times reported.
6. The Baby Diaper Rash Indicator
Yet another possible economic indicator floating out there that sounds a bit funny, media outlets in 2011 were all abuzz about diaper rationing. Sales of diapers were going down, even has the baby population went up. Also on the rise during tough economic times? Sales of diaper rash cream, ostensibly, because parents were stretching the life of each diaper and needed cream to treat the rashy results, AdAge pointed out.
7. The Appalachian Trail Hiker Index
Communing with nature might be one way to deal with a rough economy, but do people really flock to the Appalachian Trail when they’re out of work? That was one theory in 2011, an idea that didn’t sound quite right to the Appalachian Trail Conservancy: though the number of people who completed a thru-hike was up since the start of the recession that year, using those figures as an economic indicator isn’t necessarily a great idea, a representative for the organization said.
“Hiking 2200 miles for five or six months is not a cheap thrill, like, you know, sitting in the park feeding pigeons,” Brian King, the group’s publisher and author of The Appalachian Trail: Celebrating America’s Hiking Trail, told MarketPlace.
by Mary Beth Quirk via Consumerist
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