Tariff turmoil puts premium on economic oddities
NEW YORK, April 25 (Reuters Breakingviews) - Erratic times call for quirky economic indicators. The White House's helter-skelter trade policy and U.S. government shakeup are making some of the conventional metrics tracked by investors less useful. In past crises, oddities like the Baltic Dry Index and coronavirus infection rates proved to be useful, but each era requires its own dashboard. This one is revisiting underwear and lipstick while adding rush-hour traffic and Canadian tourists.
Central bankers and money managers have periodically studied everything from hemlines to Big Macs alongside unemployment and GDP growth to seek an edge in understanding economic trends. This week, the aviation industry attracted attention far beyond the usual plane-spotters. American Airlines (AAL.O), opens new tab and Alaska Air (ALK.N), opens new tab warned of softening travel, helping corroborate daily, opens new tab U.S. Transportation Security Administration updates on airport security figures. Extra insights come from various travel warnings following U.S. visitor detentions and declining numbers of Canadians driving home from their southerly neighbor.
Real-time monitoring of metropolitan congestion tells another part of the story. During a recession, fewer people take cars to work and speed up trips for those who do. At peak times in places like Houston, opens new tab and Chicago, however, roads remain more clogged than usual, according to mapping technology developer TomTom. Similarly, a job postings barometer, opens new tab from Indeed indicates a slowdown, but nothing severe. And the Waste Paper Composite Index, opens new tab doesn't show signs of strain on the recycled paper market that often portend an economic slump.
Google Trends, which tracks what users are exploring, has potentially more ominous results. Inquiries for 'recession' are rising fast, but even more alarming is the growing hunt for ' supply chain, opens new tab.' It's the sort of term typically reserved for logistics mangers and investing wonks, and the only time there was more web searches on the subject was October 2021. Then, ports were clogged with goods when an ebbing Covid-19 ignited trade and economic activity. Today's trade wars might have the opposite effect.
Two popular alternative data points are also back in vogue. Women have spent more on makeup during hard times since the Great Depression, opens new tab, even as they save money elsewhere. Cosmetics magnate Leonard Lauder coined the 'lipstick index' to crystallize the idea that cheap luxuries make people feel better. The pandemic proved an exception because of the protective masks everyone was wearing, but it should be a reliable gauge again.
Boxers and briefs can hold economic crystal balls, too, and were a targeted sales measure watched closely by former Federal Reserve Chairman Alan Greenspan. When times get tough, men are more inclined to make do with threadbare skivvies. To better understand unconventional cycles, it pays to look in strange places.
For more insights like these, click here, opens new tab to try Breakingviews for free.
Editing by Jeffrey Goldfarb and Pranav Kiran
Breakingviews
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
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