Eleven months before the great recession began in December 2007, the number of dental patients who returned for a follow-up plummeted as did the demand for x-rays. People continued having their teeth cleaned but rejected most other discretionary procedures.
Calling it “toothenomics,” Bloomberg News has hypothesized that, like stock prices and building permits, dental care is a leading economic indicator that tells us where the economy is heading.
Looking below at the Bloomberg graph of the number of dental patients who returned for a follow-up, do note a recent and perhaps worrisome decline:
Unusual Economic Indicators
While stock prices and building permits are two of the 11 leading economic indicators that government statisticians compile to generate an index number, I suspect, after checking dental revenue trends at the Journal of Dental Education, that dental care would better fit with a much less rigorous list.
And that takes us to the Men’s Underwear Index (MUI). Said to have been monitored by former Fed Chair Alan Greenspan, a dip in the MUI is a signal that “here comes trouble.”
As NPR Radio Lab host Robert Krulwich explained in 2008, “[Greenspan] once told me that if you think about all the garments in a household, the garment that is most private is the male underpants because nobody sees it except people in the locker room and who cares. Your children need clothes. Your wife needs clothes…You need clothes on the outside. But the last purchase that you don’t have to make is underpants…”
Other possible recession indicators:
- diaper rash cream sales (up)
- lipstick sales (up)
- sleep hours (up)
- divorce rates (down)
- shark attacks (down because of fewer vacations)
Our Bottom Line: Income Demand Elasticity
Like a rubber band, our spending can be somewhat elastic. During prosperity, for certain goods and services, our spending stretches a lot. Then, however, for those same items, when recession hits we buy much less. Called the income elasticity of demand, when we have noticeable changes in the quantity that we demand because our income rises or falls, our buying behavior becomes an economic indicator. What economic indicators will you be sending out as you go about your day today?