5 unconventional indicators of economic health
Jun 18, 2012
Nearly everyone in the real estate community is keeping an eye on new economic figures to gain insight into where markets are heading. The timeline for returning to our prerecession environment is constantly in flux, adjusted with every new report on unemployment, retail sales, office vacancy rates, etc.
While these are some of the more common ways to measure the health of the economy, there are a few less common economic indicators that I also like to look at. As the Managing Director of Integra’s Dallas/Fort Worth office, I usually monitor these metrics for the Dallas market. However, they can be extrapolated across the U.S. as well. Here are my five unconventional indicators of economic health and what they say about the U.S.:
1. Truck sales. Many companies shore up transportation and logistics operations when their sales activity picks up. This can be seen, for instance, in the sales of trucks. In the U.S., cumulative light truck sales are up 5.5 percent over last year. And in April, Class 8 truck sales were up 56.2 percent year-to-date. This indicates that companies have an increased need to transport more goods.
2. Personal debt. Another indicator of economic health is whether individual balance sheets are improving. In the first quarter of 2012, the rate of credit card payments at least 90 days overdue fell to 0.73 percent (down from 1.3 percent between 1999 and 2007). This indicates that consumers are reducing their personal debt.
3. Home Depot’s hiring plans. Home Depot hired 70,000 workers to meet this year’s spring demand. This indicates that Home Depot has an optimistic outlook on the number of homeowners who will be doing renovations and improvement work this year. This figure supports the prognosis that the housing market is going to continue to fare well. Lowe’s is another home improvement retail store that you can keep an eye on to glean insight on growth in this sector.
4. The car wash. When times are tough, one of the first places consumers look to save money is by trimming nonessentials out of their budgets. Car washes are just one of the businesses that struggle when consumers tighten their belts. When more consumers are washing their cars, however, it means that they have a bit more disposable income and they’re probably out shopping.
5. The boomerang generation. The boomerang generation is the young people who lost their jobs and downsized their lifestyle when the economy got bad. Twenty-nine percent of young adults ages 25 to 34 moved back into their parents’ house or coupled with friends or new roommates to save money. Watch this demographic. If we start to see them “boomerang” back out, it indicates they’re getting more comfortable with their financial situation, due to finding employment or getting a better job, for instance.
What are some unconventional indicators that you believe signify a recovering economy? Let us know in the comments below.
Author: Ben Loughry
