By Jamie Barrie I n today’s volatile climate traditional economic indica- tors can be misleading and of little value. Items like gross domestic product or job reports have been used for decades to measure the health of the economy. There are those however who look outside the box and target other data sources to formulate their own opinions on the performance of the economy. Brian Wesbury is the chief economist at First Trust and a person that is always searching for better data or economic indicators. Wesbury, and other economists, monitor new indicators in the marketplace that they hope give a more accurate and timely picture of the market economy. It is this quest that made him take notice of a recent release from the Bureau of Economic Analysis. In August, domestic heavy-truck sales fell 29 percent from the same period of 2015. It marked the weakest month in well over three years. A single drop at that level could be an anomaly but in this case sales have been slipping for two years. When domestic heavy-truck sales tank, it has historically been an indicator of a pending recession. Wesbury is not willing to confirm that direction just yet. He suggests the decrease might be narrow enough to be confined to a small pool of economic problems such as reduced domestic oil pro- duction and a slowdown in the mining industry.
a role. Last year’s sales may be artificially high due to new 2015 requirements on trucks’ antilock braking systems. If that is the case, the sharp decline this year may be exag- gerated and no more than a return to normal sales. A glass half full economist is likely to pray those anom- alies explain the decline in heavy truck sales. A glass half empty researcher may look further and connect the pieces of the puzzle as they see it. There are potential- ly additional indicators pointing towards a slowdown in GDP. Caterpillar is reporting that used equipment prices are down 10 percent from last year. Lower prices for used equipment can negatively impact the capital available for companies looking to buy new equipment. Once again this trend may also be directly tied to a slowdown in the mining industry. Another potential warning indicator is the Cass Freight Index which is a measurement of the freight volumes and expenditures across the US. In August, the Cass was off by 3.3 percent from the previous month and 6.3 percent from the same period in 2015. These numbers have also been soft over the past 2 years. While GDP, unemployment and consumer confidence can certainly confirm a recession they are often poor tools to watch for government to make quick policy decisions required to financial chaos. As economists search our new economy for the right mix of indicators it is obscure reports like heavy-truck sales that may guide govern- ments better in the future.
He also speculates that regulatory issues might have played
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NOVEMBER 2016 • SPOTLIGHT ON BUSINESS
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