Off The Charts

SPECIAL TO THE TIMES

If you're concerned about the direction of the economy, always watch out for lightbulbs.

No, not the ones that go off in your mind but the ones that routinely and all too quickly burn out in lamps. Because when the sales of lightbulbs collapse, the economy probably is headed for the dumpster.

The "lightbulb index" came about in the early 1990s, when Michael Boskin, then-chairman of the President's Council of Economic Advisers in Washington, had his staff prepare stacks and stacks of data about the U.S. and world economies. One lengthy analysis concluded that an excellent economy was at hand, but another report predicted hard times.

Then Boskin noticed that supermarket shelves were overflowing with lightbulbs and that few shoppers had them in their carts, and one of those in-your-mind bulbs lit up. He called a major lighting manufacturer and, sure enough, the bottom had fallen out of commercial and industrial lightbulb sales, and factories were laying off second and third shifts. An official, government-declared recession began the next month.

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Lightbulb sales, however, are not the only unofficial way to judge a nation's economic health.

Caroline Postelle Clotfelter, a professor emeritus of economics at Mercer University in Macon, Ga., wrote "On the Third Hand: Humor in the Dismal Science," a scholarly, albeit slim, book about wisecracking economists in history.

"My own unofficial gauge for inflation is the 'golf ball rule,' " Clotfelter said. "Lost golf balls are only picked up from the streets when inflation is expected to increase. During times of very high inflation, you won't find any balls at all near golf courses because passersby have already scooped them up."

The "greeting card index"? During times of high unemployment, people scrape by with just a card at birthdays, anniversaries and other major occasions, so greeting-card sales soar.

The most widely known off-beat economic index had been the "hemline theory of the stock market," which states that when hemlines on women's dresses go up, we are in store for a rock 'n' roll economy.

It's relatively accurate. The short hemlines of the Roaring '20s literally dropped to the ground during the Great Depression of the 1930s. They were back up during the 1940s but dropped again in the early 1950s, when the boom of World War II slowed somewhat. And so on.

The "hemline theory" began in the 1920s when young George W. Taylor worked in the fashion industry. Taylor later became professor of industrial relations at the University of Pennsylvania Wharton School and labor advisor to five U.S. presidents. But his real claim to fame came when he observed that many women raised their hemlines during times of plenty so others could see their costly silk stockings. (Nylon had not been invented yet.) During leaner times, he said, hemlines were lowered so people couldn't see that women were not wearing stockings.

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Even the sun can affect Earth's economies, according to experts. Exacting calculations have been done by leading scientists to show that sunspots and times of maximum solar activity do seem to have some link to dismal financial results. And then there's the moon.

Norman G. Fosbach, editor of the Market Logic newsletter, has shown that stocks move up sharply the day after a blue moon, which is considered to be the second full moon in a calendar month. But Fosbach finds the "blue moon theory" doesn't seem to apply in years with two blue moons, and he regards the relationship as a fluke.

Yet another researcher, Harold Zullow of the University of Bath in England, wrote in a 1991 essay for the Journal of Economic Psychology that you can forecast the ebb and flow of national financial tides by listening to the songs of top singers. Looking at four decades of recording charts, Zullow found that pessimistic lyrics in hit songs indicated a pending recession, whereas optimistic songs were signs of plenty. A related theory says that a recession officially starts when the worst songs reach the top of the charts.

According to Gene Sinclair of Pruneyard Financial Group in Campbell, Calif., an index almost as accurate is the "cocktail party chatter indicator," or CPCI, as it's known to industry insiders. The CPCI states that the more quickly party talk turns to the stock market, the more negative prospects are. Yet another indicator is the average age of those doing the talking. The younger the age, the more negative the indicator.

So if you hear 6-year-olds talking about trading stocks, you just might consider staying away from the market altogether.

That is, unless lightbulbs are selling well and a blue moon is approaching.

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