The Trash Index: The Latest -- and Best? -- Economic Predictor
Accurate, but in Which Direction?
Fundamentally, the trash index makes sense. After all, when a family buys a new couch, they often throw out the old one; ditto when developers construct new buildings. Much of this refuse makes its way to landfills. According to Bloomberg, the index is incredibly accurate -- between 2001 and 2010, there was an 82.4% correlation between flow of trash and the economy.
The Trash Index and Job Creation
Regardless of its predictive ability, one of the trash index's most interesting aspects is the direct relationship that it suggests between consumption and the economy. While much has been made of "job creators," the economic titans who allegedly carry America's future on their shoulders, the trash index suggests that the real job creators might be the middle class. After all, when the middle class fills its homes with products and railcars with trash, they are effectively creating jobs. On the flip side, when they sock away their dollars, the trash trains slow down and the economy suffers.
With the fiscal cliff looming, the question is whether the middle class will keep fueling the economy or start squirreling away money in preparation for tough times. For now, at least, the trash trains seem to suggest that a storm is on the way -- and the real job creators are keeping their money in their pockets.
SLIDESHOW: 8 STRANGE ECONOMIC INDICES
Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at firstname.lastname@example.org, or follow him on Twitter at @bruce1971.