Oregon Public Broadcasting

As businesses owners wait for an economic recovery, they're keeping a sharp eye out for what's known as 'leading economic indicators.'  Those can be a number of things — take cardboard box sales.

The idea is that if there's a sudden up-tick in the number of cardboard boxes sold, that means sales are up and businesses need the extra boxes to ship more product. Kristian Foden-Vencil takes a look at some of Oregon's 'leading economic indicators.'

Sifting through the economic tea-leaves is never easy. But there are some good indicators -- like trucking.

Tom Potiowsky: "You know, if trucking miles are going up. That means commerce is picking up. People are shipping things more and that means possibly then economic activity is rising."

Tom Potiowsky is  the state economist. He's the guy who predicts how much money the state can expect in its coffers each year.

When he gets it right, no kicker check shows up in your mail.

So you know how often he gets it wrong.

Potiowsky says his job is really half statistics and half art.

Tom Potiowsky: "Oh it definitely is an art. Because no two recessions or business cycles are necessarily alike. an indicator that works will under some circumstances won't work in other circumstances. For example, it used to be the spread between longer-run interest rates and shorter-run interest rates, was an indicator. Because it was good indicator of how the federal reserve policy was changing.  But, federal reserve policy is in a whole new ball-game today and that doesn't work as well as it used to."

Well if interest rate spreads aren't working so well, how about 'help wanted' ads?

The Oregonian Newspaper tracks its help wanted ads, and the state uses the data. The idea is that if businesses are advertising for more people, then good times can't be too far off.

So what does Tom Potiowsky think? Good idea?

Tom Potiowsky: "We are definitely going to change away from the Oregonian Help Wanted Index. I mean given the internet, Monster.com for example, there are a lot of other ways that people get the message out that there's a help wanted add."

You can see, it's not so easy. But that's what makes it fun.

Many people come up with their own index. For example, the 'Home Depot' index -- that's when you look at how many people are buying stuff to fix up their houses, and extrapolate from there.

Potiowsky has his own unofficial 'fast food indicator.' And it's a bit of a joke. But here's how it works.

He pulls up to a drive-thru and buys a meal for say $5.28. Then he hands over $8.64 in change.

Tom Potiowski: "Now the person behind the counter, gets confused, has to call the manager over for some help. Then I know in this local area the economy is doing pretty well, because the person behind the counter probably shouldn't have that job. So the labor markets must be a little bit tight. Now I do worry and when I do the same thing and the person gives me the exact change immediately and gives me an offer to fix my web page. Then things are not good."

Don't worry, Potiowsky doesn't include the 'fast food indicator' in the official state numbers.

And neither does Tim Duy, who puts together the University of Oregon's Index of Economic Indicators.

Each month, Duy takes payroll numbers; building permits; orders for new goods; and other figures. He then adds them up and comes out with one number.

If you plot that number on a graph it looks like a bouncing ball. It sank with the economic meltdown, then bounced up. But says Duy, over the last couple of months it's on its way down again. 

Tim Duy: "What was most disconcerting is a shortfall in employment services payrolls. And this is primarily what we think of as temporary help agencies. We had been hoping that as the economy strengthened, that we'd see much more hiring activity in this category."

Temporary jobs have traditionally been great leading economic indicators. A business will take someone on temporarily before making a full-time hire.

Nicholas Martin is with the Oregon-based temp agency, 'Staffing Solutions.'

Nicholas Martin: "It's difficult to say whether it's going to be a leading indicator the way it has in the past. This time around it has been a little less clear as a leading indicator what employers are going to do with respect to hiring."

Remember that bouncing ball? Martin says over the last year, hiring figures have bounced up and down, with no clear direction.

Some economists think advertising may also be a good leading indicator: If a business thinks things are about to turn around, it might well start running ads in the hope of putting its name out just as people start buying again.

Aver Overland runs the Overland Agency in Portland. He says nowadays it's difficult to get an accurate picture.

Aver Overland: "We do see from industry research and reports that certain media is suffering and are losing business and they have done over the decade. But I do see a huge upswing in ... jobs related to social media and mobile applications."

In other words, he's seeing a lot of business in new media like cell phones and on web pages. But not in old media like newspapers and radio.

So again, economists are left rifling through the economic tea-leaves to try and figure out which way Oregon is headed.