(This article originally appeared in the Philadelphia Inquirer)
Many of my small business clients have been anxiously awaiting an economic recovery and it appears the recovery has arrived. But when will we be back to a pre-pandemic economy? How strong will the recovery be?
No one knows for sure. But my smartest clients aren’t waiting for government released data every month to inform them. Instead, they’re gauging the economic recovery by using weekly, high-frequency economic data that lets them know how strong and fast our economy is recovering from the deep pandemic recession. Knowing this helps them better time their hiring and spending decisions as well as the pace and amount of any planned investments. So what are these “high frequency” indicators?
Here are five I’m watching every week.
Open Table state of the industry index
When more people are eating out, that’s a good sign that consumers are spending, right? Open Table is a popular app used by millions of people around the world to make restaurant reservations. Each week since the beginning of the pandemic, the company has been publishing reservation data by country, state and city, and this data has proved to be a powerful way for business owners to track the recovery of consumer spending. Nationally, restaurant reservations are below their pre-pandemic levels by about 22%. But already Florida and Texas have exceeded these levels. Pennsylvania restaurant reservations are still about 40% off. Philadelphia restaurants are off slightly more.
You can track this index here: opentable.com/state-of-industry
Transportation Security Administration airport travelers data
Every day, the TSA publishes the number of travelers going through its checkpoints in U.S. airports. This metric tells us how the travel industry is recovering in real time. We know that as travel rebounds, that means business people are getting back on the road to meet with their customers and attend conferences. It also means the leisure industry is bouncing back. So far, travelers through the nation’s airports are about two-thirds the level compared to this time in 2019. There’s still some ways to go, but it’s a world of difference from where we were last year.
The daily numbers are made available here:tsa.gov/coronavirus/passenger-throughput
American Staffing Association index
The American Staffing Association publishes a weekly index that measures the hiring of temporary workers based on thousands of emails sent to companies in four annual sales categories: under $7.5 million, $7.5–$24.9 million, $25–$99.9 million, and $100 million or more.
“The staffing industry employment serves as a coincident economic indicator and a leading indicator of total U.S. nonfarm employment,” the organization says on its website. Its index gives us an “almost real time measure of weekly trends in staffing industry employment and current economic conditions, as well as of future overall employment trends.”
The good news is that temporary staffing needs, after falling precipitously last year, have now reached 2019 levels, which is an indicator of a strong recovery and a significant need for labor.
You can track this index here: https://americanstaffing.net/research/asa-data-dashboard/asa-staffing-index/#tab:52-week-chart
St. Louis Fed weekly economic index
This index, which was developed by two economists from the Federal Reserve and a Harvard professor, takes into account changes in consumer behavior, the labor market and production by combining a bunch of different indexes all into one. These include Redbook same-store sales, Rasmussen Consumer Index, new claims for unemployment insurance, continued claims for unemployment insurance, adjusted income/employment tax withholdings, railroad traffic originated (from the Association of American Railroads), the American Staffing Association Staffing Index (mentioned above), steel production, wholesale sales of gasoline, diesel, and jet fuel, and weekly average US electricity load. After falling to historic levels in April 2020, it is now at historic highs. To no one’s surprise, the index has been very volatile as has the economy.
You can track the St. Louis Fed Weekly Economic Index every week here: https://fred.stlouisfed.org/series/WEI
Baltic Dry Index
Did you know that the Baltic Sea is one of the world’s busiest traffic lanes for international shipping? Neither did I, until an economist-friend made me aware of the Baltic Dry Index. This handy metric tracks the cost of freight for shipments in the Baltic. As the cost of freight goes up, that’s an indicator of rising demand for shipments and more economic activity. When it falls, the opposite is true. The Baltic Dry Index is used by many economists to help predict both potential economic recessions and recovery. The good news is that freight prices are on the rise.
Here’s where you can track the Baltic Dry Index: https://tradingeconomics.com/commodity/baltic
After running a small business for 25 years, I’ve learned that my smartest clients don’t like to wait around for monthly data published by the government that’s not only based on surveys but are often subject to revisions.
Instead, they’re always looking at high frequency data like the metrics I’ve mentioned above to peek into the future and use that information to better inform their decisions. It’s not just important for them but for all the people – our employees, customers, partners, suppliers – who are relying on us to make the best decisions we can with the best data available.