The economy can be a mysterious thing. Those who have made their fortunes through successful investing can seem more like oracles than scientists, possessing an innate wisdom or arcane knowledge that
The economy can be a mysterious thing. Those who have made their fortunes through successful investing can seem more like oracles than scientists, possessing an innate wisdom or arcane knowledge that gives them mystical insight into the future value of money and goods. Turning a few dollars into a few million will make anyone want to imitate, or at least listen to you. How do they do it? How do those wizards of Wall Street make the decisions that put them in the penthouse while the rest of us languish in the lobby?
The answer, as often as not, is by looking at signs of how the economy is doing. These signs, known as indicators, help those with a keen eye to judge the health of an economy. Sometimes it goes the other way. For example if we know that people will have less money to eat out, we can predict they will purchase more canned goods. This was confirmed in the UK by the Baked Beans Index, a statistical measurement of the rising value and sales of baked beans. A savvy investor who knew what lay ahead could have bought shares in Heinz and cleaned up.
Some indicators are fairly straight forward. The Consumer Confidence Index, released monthly, is a survey of thousands of households that just asks people how they feel they are doing, how they feel the economy is doing, and how they think it’ll all be going in six months. The more optimistic they are, the more you can believe they’ll be spending and investing instead of hoarding. That’s very useful, of course, but it’s also pretty boring.
Here are five funny economic indicators that sound bizarre but have been shown to be fair barometers of economic weather.
THE PRETTY WAITRESS INDICATOR
Also known as the Hot Waitress Economic Index, this measures the number of people in service industry jobs with above average sex appeal. It is assumed that more attractive people have an easier time finding higher-paying jobs in good economic times and, therefore, the more that are forced into lower paying jobs, the worse the economy is.
This indicator is actually more useful than some other employment indexes because while employment tends to lag behind economic growth, sexy people find work faster. This basically means that the next time you order a caramel machiato and your barrista is no longer a struggling lingerie model but the usual hobo-bearded tattoo aficionado, you can hit the stock market with a little more confidence.