Things have been improving since then. The jobs picture has brightened (for some), with unemployment falling from 9.9 to 7.5 percent. From 2010 to 2013, household income has grown, on average, by 4 percent, according to the Federal Reserve. But the gap between rich and poor keeps growing. Median income declined by 5 percent over the same time frame.
If there is room for improvement, it appears that the U.S. economy and way of life (for many) has survived. But what about the future? Are we now setting the stage for the Great Recovery, with an economy thrown back into high gear? Or is this just a relatively calm period before another storm?
The Fed, economists, consumer watch groups and investment centers use a variety of data points or indexes to determine the current state of the economy. Let’s take a look.
GDP (Gross Domestic Product)
GDP is typically considered to be the most important measure of the economy’s current health. When it increases, it’s a sign the economy is strong. Businesses will adjust their expenditures on inventory, payroll, and other investments based on GDP output.
Unemployment Rate
The unemployment rate measures the number of people looking for work as a percentage of the total labor force. In a healthy economy, the unemployment rate will be anywhere from 3 to 5 percent.
Stock Market & S&P 500
The Standard & Poor’s (S&P) index tracks changes in the stock prices of companies. It strives to tally the nation’s aggregate stock of capital while also gauging future business and consumer confidence levels. Growth of the S&P 500 index can trigger increases in business investment. It can also indicate higher future consumer spending. A declining S&P 500 index reflects a trend where both businesses and consumers are tightening their belts.
Crazier Economic Indicators
These are all indicators that help determine the current condition of the economy. Former Fed chairman Alan Greenspan used these and other indicators that sound, at first, bizarre but then, in the end, make total sense.
Beer Consumption
How can beer consumption be an indicator? If people are spending more money on beer at the grocery store versus the bar, it can signal that people are tightening their belt and forgoing the night out on the town, but still enjoying a cold one at night.
Buttered Popcorn Sales
How on earth can popcorn show the direction of the economy? Similar to the beer theory. It looks at movie ticket sales and microwave popcorn sales from the grocery store. If the sales of homemade popcorn is on the rise and movie tickets are sliding, it is an indication that more people are saving their pennies by watching movies at home.
Men’s Underwear Sales
This might sound like one of the more insane indexes to watch, though Mr. Greenspan was particularly interested in this one. Men spend less on new underwear in recessionary times. Sales fell 2.3 percent in 2009, for example ; the first drop since 2003.
Indications in Our Business
What about our industry? I talk to people all day long. Part of my day is just getting someone on the phone. They are either in a meeting, on-site or busy getting a gig going. Keyword: Being busy! Everyone is extremely busy right now. A good sign that work is out there and that money is moving.
Empty Rental Houses
Seems like whenever I need a piece of gear for a gig these days, I also have to spend more time on the phone tracking it down. I know my rental houses normally have what I want, but nothing seems to be available when I need it. A good problem to have as a rental house, but bad for me.
Is our economy on the upturn? In our business, all indications point to an overwhelming yes. (Maybe that’s why this issue is so big!) But that is my reading of the crystal ball. What are your thoughts? Share them with others on our social networking site, www.ProLightingSpace.com.
For Justin’s video introduction to the Nov. 2014 issue of PLSN, go to www.plsn.me/201411ednote.
