Thursday, July 18, 2013

The Beer Index

Heard on NPR's program Planet Money.

It was an interview hosted by Melissa Block. It concerns the Federal Reserves Beige Book. No numbers, no contradictory economic theories. People call up the 'lumber guy', for example and ask him … "How's business?" So it's just full of antidotal stories that gives an overall picture of the economy. Now the Beige Book is online so you can read it here.

So what about this Beer Index thing?

Several years ago while compiling the Beige Book people notice an advance warning about the coming housing market crash. It had to do with the decrease in convenience store beer sales reinforced by a downward trend in the beer distribution business. Construction workers stopped buying six-packs after work. "Why?", you ask. Because it was inferred, and proved to be correct that these guys were not working anymore.

So as the title of Melissa Block's  program state, if you want to know about the economy try the "Ask Your Uncle Approach To Economics."
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