I know what the Fed needs: more women. Women will tell us when the next recession will happen. Last year, in the midst of the recession, I wrote about some key metrics to watch that would tell us when the recession would end. Well, the recession has pretty much ended. Now our concern is not only how the economy will grow but also when the next recession will occur.
Luckily, I know women will tell us this.
Is She Being Served?
For example, we all know that men could survive entirely on pizzas and ribs forever. But that would kill most of the restaurant industry. My wife, on the other hand, likes to be taken out to dinner. She likes napkins made out of cloth and candles and waiters who pamper her like I never do. That’s why the National Restaurant Assn.’s Restaurant Performance Index is a key indicator. This monthly statistical barometer, based on a survey of restaurateurs nationwide, tracks the health of the restaurant industry using factors like same-store sales and customer traffic. Happily, this index has been on the rise since midsummer. A decline in this index means our wives are asking us to take them out to dinner… less. Yikes! Now, this is a big sacrifice for most women, so to do this they must know something about the economy that men don’t. Business owners should stop and ponder that before making any significant investments.
Another thing I have learned about my wife: She likes to be served. She wants breakfast in bed. She wants me to rub her feet. That’s why it’s important for business owners to keep an eye on The Institute for Supply Management’s Non-Manufacturing Index. The service industry comprises hotels, airlines, and restaurants, among other businesses driven by women. In fact, the service industry makes up about 90% of the economic activity of the U.S. That’s because it’s the women who are calling the shots, don’t you see? This index recently reached its highest level since spring 2008, so it’s clear that all these females are tired of this recession and demand more service. A decline in this index should be a red flag for business owners.
Recently, my wife complained that my beloved Jeep Wrangler was too loud, too bumpy, too leaky, and too impractical for a bald, married guy with three kids. So naturally I replaced it with another, more practical car. I wish I could afford a brand-new BMW but, like most men, I settle for what I can get. That’s why good business owners keep an eye on the Manheim Consulting’s Used Vehicle Value Index, a monthly barometer of used car prices. It’s been rising over the past few months, which, to me, is a clear indication that women are demanding more replacement vehicles from their men. When this index starts trending down it means that the pressure from our wives is easing. That won’t be a good sign for the overall economy, either.
Follow the Bling
My wife, like most women, gets sick and tired of the screaming kids, intrusive neighbors, and overall monotony of the day. So I do what other guys do when they want to treat their wives like a queen: I take her on vacation to the Jersey Shore. That way our kids can still scream, the neighbors can still be intrusive, and the day will still be monotonous… but at least there’s an ocean in the background (and good pizza nearby). Apparently, my wife’s not the only one making these demands. Traffic Volume Trends, an index from the Federal Highway Administration, has been creeping back up again. This is a monthly report based on traffic data from about 4,000 locations nationwide. More traffic each month means more trucks on the road delivering goods, and more vacations. That’s a good thing. Even if you’re going to the Jersey Shore. A decline in this barometer may spell trouble for the economy ahead.
Finally, what does my wife want the most? Why, more bling, of course. I’m talking about jewelry and clothes. When the economy’s good, she’s out shopping. When things are tight, she does without. Well, all indications are that the economy’s improving. But don’t pay attention to those retail sales statistics you’re hearing on the evening news. Instead, pay close attention to the source: the raw materials that go into these goods. Check out the Dow Jones-AIG Commodity Index (DJP). That’s on the way up, too. This index is composed of future contracts on a bunch of commodities that make up the backbone of my wife’s wish list, like gold, silver, and cotton. A decline probably indicates that women are holding back. Now, that’s a potential financial crisis.
See what I mean? There are better indicators for keeping an eye on the economy than silly things like GDP, inflation, and interest. Smart guys who run their own businesses know this. The economists have proven that they don’t know what they’re talking about. But the women? Oh, they know! That why I’m keeping a close eye on my wife. I’ve learned her spending habits mean far more than any forecast from the Federal Reserve.
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular “Penny Pincher’s Almanac” syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at www.quickerbetterwiser.com.
