With the corporate earning season here, and the impending release of the GDP (Gross National Product) numbers, everyone is scrambling to read the economic tea leaves.
To get a leg up on the numbers, economists from Washington to Wall Street are busily dissecting everything from jobless rates and new home sales to the money supply and asset prices.
In China, predicting their economic prospects is much simpler.
To project their fortunes, state economists wander over to the Wan Chai Street Market in Hong Kong or Temple Street Night Market across the harbor in Kowloon to gauge the prices and sales of Shanghai hairy crabs.
Sadly Repeating History
Smaller than a Dungeness crab, these scrumptious little guys are usually steamed and served with a splash of soy sauce. These freshwater crustaceans start to fatten as soon as the autumn chill cools the Yangtze River Delta.
When China’s economy is booming, shoppers are hard pressed to find these palm-sized delicacies in the market. In good years, half a million hairy crabs are sold in Hong Kong when they are in season, from October to December.
Sales of hairy crabs plummeted about 20 per cent last year when U.S. investment bank Lehman Brothers collapsed at the start of last year’s crab season. By the end of the season in January, hairy crab prices had fallen nearly 80 percent.
Lest you think this is simply a folksy economic oddity, the same thing happened during the Asian Financial Crisis a decade ago and the SARS epidemic in 2003.
Recently, sales of this tasty decapod have been brisk. Prices have risen from about $420HK to more than $800HK or about $100 U.S. for each hard-shelled morsel. With this data, Chinese economists confidently have concluded that their economy is firmly on the road to recovery.
The U.S. is not without its own set of quirky economic predictors.
You Can’t Fool This Theory
One of my favorites is the old Hemline Theory. When knees show, the market rises. As hemlines fall, so do stocks.
Consider the Roaring Twenties, when the stock market was booming. Short flapper dresses were the rage. As the Great Depression set in, there was less glam to the gam. Think model Twiggy and the super-short mod skirts of the ‘60s followed by falling hemlines in the ‘70s as stock prices weakened.
It’s fool proof.
Some folk economists watch the Appalachian Trail Hikers Index. As the theory goes, when the going gets tough, the tough take a hike. This fall, there has been a spike in the number of hikers hitting the trail – meaning more people have excess time on their hands.
Then there’s the Tightie-Whitie Index. When the economy is stable so are the sales of men’s underwear. But when money is stretched thin, men tend to wear their skivvies longer before replacing them. Sales of men’s underwear for 2009 are projected to be their lowest in years.
As Halloween approaches, more analysts are paying close attention to the Graveyard Index. When the economy was strong, the sales of individual cemetery plots were rivaled only by the purchase of second homes and investment property. With the economy in the dumper, online auction sites like e-Bay and Craigslist have been full of ads from desperate sellers trying to turn over their graves for cash.
Suddenly cremation is cool.
Most avid sports fans know about the Pro Football Blackout Index. As this season opened more than a dozen NFL teams had failed to sell out their home games. As a result, more games than in the past ten years are being blacked-out; much to the chagrin of their cash-strapped hometown fans.
Finally, there’s the Hot Waitress Index.
When times are flush, attractive women have lots of opportunities to pick up marketing gigs, modeling or sales jobs. Even though layoffs in this recession have hit men harder then women, when these opportunities dry up, restaurateurs recruit hot gals to attract diners.
If the two-for-one specials don’t lure the lunchtime business crowd, restaurant owners figure maybe the hot gals will.
It works for me.
Two correlative indicators are the Fewer Babies Being Born Index and companion Condom Sales Index. In a recent survey, 44 percent of women said they were going to put off having kids or have fewer kids because of the economy.
At the same time, condom sales are off the charts. Unfortunately, the data doesn’t show whether these latex safety sales are being driven by cautious would-be dads or reluctant would-be mothers.
Given the fact that the only predictive discipline less precise than meteorology is economics, it seems that these indicators are as accurate of a measure of our future fortunes as any.
Just ask Harry.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
