Leading economic indicators are indicators that usually, but not always, change before the economy as a whole changes. They are therefore useful as short-term predictors of the economy. Leading indicators include the index of consumer expectations, building permits, and the money supply. The Conference Board publishes a composite Leading Economic Index consisting of ten indicators designed to predict activity in the U. S. economy six to nine months in the future.
Here are the components of the Conference Board’s Leading Economic Indicators Index:
- Average weekly hours (manufacturing)
- Average weekly initial jobless claims for unemployment insurance
- Manufacturers’ new orders for consumer goods/materials
- Vendor performance (slower deliveries diffusion index)
- Manufacturers’ new orders for non-defense capital goods
- Building permits
- Stock prices of 500 common stocks
- Money Supply (M2)
- Interest rate spread
- Index of consumer expectations
For those of you still reading, I should ask why, but I won’t.
So how does my blog fit into this?
Well, many of you are aware of the blog I wrote back in 2018 about the World’s Largest Tire Manufacturer (hint: it’s Lego). For whatever reason, that blog has been far and away my most popular blog, with over 77,000 views in nearly four years.
A couple of days stand out in particular:
- September 5, 2019, the post had over 5,000 views.
- May 13, 2020 – the past had over 10,000 views (thanks to Reddit)
Since that crazy day back on May 13, 2020, there have not been any significant views.
And you could argue that is when the effects of the pandemic really started to be felt in our economy, after a couple of months of lockdown. The tire past has had a steady number of views, but much lower than what it used to receive.
But that all changed a couple of days ago.
On Tuesday, my blog received over 1,100 views for the day, with more than 650 coming from the tire post.
Yesterday, my blog had over 1,300 views, with more than 880 of them from the tire post.
And so far today, my blog has more than 800 views, with more than half of them the result of the tire blog.
To put this in perspective, here’s what last week looked like for the same three days of the week:
Tuesday, March 1: 490 total views, 12 from the tire post
Wednesday, March 2: 490 total views (that’s very rare to have the same exact number two days in a row); 30 came from the tire post
Thursday, March 3: 444 total views, 50 from the tire post
As usual, I am not sure how to explain the big jump this week. I tried to look at where the views are coming from, but it just looks like they are coming from Google searches (no Reddit this time).
However, after seeing what has been going on the past few days, I have come up with a new theory.
My tire post may be a leading economic indicator.
The drop in views after May 2020 seemed to have been a harbinger of the problems our economy would be facing in the months ahead.
Thus, I am really hoping that the strong performance of the tire blog over the past few days is a sign that the economy will be seeing strong improvements as well in the near future.
There could be some logic to this.
People are starting to see business pick up, and that may be driving the demand for tires. This may lead people to search the web to see what the best tires are, and they somehow stumble onto my blog. Once they read my blog, they will also have a strong desire to buy Lego products, which would also boost the economy.
So Dear Members of The Conference Board, please consider adding a new leading indicator to your composite metric. And if for some reason you are fixated on only having 10 measures, then just get rid of M2.
Nobody really knows what it means, so you might as well drop it
But people understand Legos…
*image from Seeking Alpha