"Monday 5 Things" with D. Paul Graham

Monday 5 Things…..The Dreaded “R” Word….

How good is your crystal ball as to when the next recession will hit? Mine’s quite murky. Ask ten economists when the next recession will hit. You’ll likely get twelve different answers. The media (many of whom are arm-chair pseudo economists) are so far outside a standard deviation of opinion, fact and truth, that the same media outlet may opine differently on the same subject in the same day. Ten-year cycles, inverted interest rates, employment rates, GDP declines, oil prices, asset bubbles, consumer confidence, the stock market, inflation and/or deflation… all things we were taught to pay attention to in our university and college economics classes. But there are other economic indicators that may be just as relevant that you likely didn’t hear about whilst cramming for micro or macroeconomic exams. With the last big recession (which started at the end of 2007 serving as reference for us), and with a nod of thanks to Business Insider for some of these statistics, today’s M5T takes a some-what tongue in cheek look at a few obscure economic indicators that may show where the economy is headed. Oh, and before you delve into this over your coffee, readers are advised to consult with their tax accountants and other such advisors before making any financial decisions after reading today’s M5T.

1. Diaper Rash Index

When times get tough and cash gets tight, the parents of newborns tend to change fewer diapers. In 2008, sales of diaper rash cream increased almost 3%, whilst sales of disposable diapers declined by 9%. Sounds itchy and soggy to me.

2. The R-Word Index

The use of the word “recession” in the media correlates directly to recessions. The Economist, the Wall Street Journal and The Financial Times of London have all kept records of the use of the R-Word leading up to and during the recessions of 1990, 2001 and 2007. Keep an eye on your newspapers and media. It must be true – I saw it on the internet.

3. First Date Index

Apparently first dates go up when the economy takes a dip. Could be that people aren’t working as hard, if at all, or perhaps they are feeling dejected and lonely. Whatever the reason, according to Match.com, 2008 was the busiest time for them than in the prior 7 years. The second busiest weekend they had was when the Dow dropped to a 5-year low at the end of 2008. It may be safe to assume that during a recession, most of these are cheap dates.

4. Cardboard Box Index

When box sales drop dramatically it could be the start of a recession. Most shipments of goods from around the world are in cardboard. No stats were found on those pesky hermetically sealed, finger-slicing plastic wraps, but I digress. In 2008, the largest producer of cardboard boxes, Smurfit Kappa, lost almost $270 million in revenue, and profits were half of the year prior. Plan now so you don’t let yourself get boxed in during the next recession.

5. The Other “Boxer” Index

When recessions hit, men tend to purchase less “tighty-whities”. Even retired Chair of the Federal Reserve Allan Greenspan agreed with this index. Research firm Mintel published a report citing that for the first time since 2003, men’s underwear sales (a market in excess of $8 billion) fell over 2% during the recession in 2009. No word yet on a correlating increase in laundry detergent sales to offset skid marks. Mea culpa if that made you lose your appetite for breakfast!

Here’s to a week of positive, stagnant-free indices for you.

© 2019 D. Paul Graham, all rights reserved.

D. Paul Graham is passionate about people, culture, photography and business. He has embraced his wanderlust with his travels around the globe and is at peace with his need for spirited drives in all things automotive.

You can find M5T each Monday here on www.southmag.com and by friending D. Paul Graham on Facebook. Paul is also a contributing photographer to South Magazine. His photographic work can be found on Instagram @dpgraham and at www.imageGRAHAM.com. Your feedback is always welcome. Email Paul at dpg@imagegraham.com