The Big Box Economic Indicator

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By Mark Lundegren

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Recession or no recession? Improving economic conditions, or declining ones?

Answering these and similar questions, reliably and in advance, can be greatly aiding in our lives and personal decision-making. And this is no less true in the lives and decisions of entrepreneurs and their organizations.

Our perceptions of economic conditions, much as with social and technological trends, can mean the difference between successful choices and less successful ones. In our lives and families, examples include decisions about changing jobs and making major purchases. In enterprises, it spans decisions about starting new ventures, entering or exiting markets, and proceeding with or delaying innovations and investments.

Big Box Indicator

My Big Box Economic Indicator, summarized in the graphic above, is a simple, direct, and often quite useful way to get a sense of current and likely future economic conditions, especially in local areas and markets. As outlined in the graphic, the model is based on our personal, on-the-ground survey of big box, big name, or other prominent stores, especially ones in cyclical and other leading or indicating markets. Overall, this survey and its companion predicting model seek to provide us with a clearer sense of immediate market and economic conditions, and in turn what this may tell us about future ones. Since the model works best for cyclical markets, stores focused on staple or essential goods, including supermarkets, typically are not good candidates for the approach.

In keeping with the graphic, this self-led method and real-time model work by having us examine and categorize the relative amounts of customers and employees on one or more store floors – in all cases, compared with one another and also normal or average conditions. This information then is taken as an informal predictor, gauge, or indicator of likely economic conditions in the near-term. The approach doubtless is imperfect and also may be locally-biased, but it is remarkably quick and easy, literally can be used while we shop or run errands, encourages the broadly-aiding practice of direct and attentive observation, and may provide us with important perspective to aid economic decisions, large and small.

In the model, more employees relative to customers than is the norm, or fewer customers per employee than is typical – especially across repeated and varying store visits – is viewed as cause for recessionary concern. Conversely, more customers and fewer employees than is ordinary is taken as an early signal of economic rebound or turnaround. Notably, this may be more so than wide decreases or increases in prices, which is another useful economic indicator, but also one that may lag changes in store customer and staffing levels by weeks or months.

Today, there of course are many and far more formal indicators of current and future economic conditions, ones that similarly might aid our decision-making and sense of the economics, or socioeconomics, around us. But as highlighted in the graphic, these measures are often retrospective, delayed, aggregated across large markets and wide geographies, and perhaps marked by information gaps in areas of interest to us.

Given this, I would encourage you to experiment with my Big Box Economic Indicator, especially as a supplement to following more formal economic data, and as always, welcome your thoughts and comments.

Mark Lundegren is the founder of EconomicaNatura.

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