A Fresh Approach To Measuring The Economy
LINDA WERTHEIMER, host:
Over the past couple years, we've heard a lot about the numbers, the numbers that chart the course of the economy, unemployment, foreclosures, housing starts, retail sales, gross domestic product, so forth. But what about measuring subway passengers or Broadway ticket sales or the average price of an apartment on Craigslist?
City-based economists are increasingly creative in their search for clues about the economy. They want to know how people are traveling and spending on the local level, and they want to know now.
Ted Egan is one of those creative thinkers. He's chief economist in the San Francisco Controller's Office.
Welcome to our program.
Mr. TED EGAN (Chief Economist, San Francisco Controller's Office): Thank you.
WERTHEIMER: I wonder if you could just tell us right off the bat: What do you think is the most unusual economic indicator that you use to monitor San Francisco?
Mr. EGAN: Well, I'm not sure we're looking for unusual ones. We're looking for indicators that tell us things that the official statistics can't tell us. There are no official government statistics that are timely, that are based at a city level, that tell us what the housing market is doing, for example, and this is one of the reasons we look on Craigslist for information about apartment rentals.
We need to know what the housing market is doing. Craigslist is a great source of data that basically changes in real time.
WERTHEIMER: As I understand it, your office is located where you can see the subway where the BART comes in to a major shopping area in San Francisco?
Mr. EGAN: That's right. When we look at people getting on and off the subway on the weekends, that's a pretty good measure of how many people are out to shop, and we saw, when the recession started, that that number went way down, and now, we're seeing it leveling off, and we're just beginning to see the earliest glimmers of a turnaround in that indicator.
We could wait for several months to get official sales tax statistics, but there are advantages to us having that information faster, and so that's why it's great to work with these sort of non-traditional data sources.
WERTHEIMER: What are you looking at right now for clues about how San Francisco is really doing right this minute?
Mr. EGAN: The three main indicators that we're working with, that are available to us in a timely way are the subway counts, the parking garage counts and also the Craigslist indicators.
WERTHEIMER: So you look at average rents for one-bedroom apartments, as I understand it. That's what you use for your snapshot. How much movement do you see in rents?
Mr. EGAN: We see monthly swings of two and three percent, sometimes, and we've seen, since the beginning of the recession until now, I believe in the 10 to 15 percent drop in rents in San Francisco. So it is a very real measure of what the recession has meant to us.
WERTHEIMER: What are the other things you'd like to be looking at?
Mr. EGAN: Well, all of the things that are bought and sold on Craigslist, we could potentially comb through and say: What are the prices being asked for sofas or chairs or concert tickets or haircuts or things like that? I'd also like to begin to tap into other sources of information on infrastructure.
We get monthly reports, for example, from the San Francisco International Airport, which has a full count of the number of people who get on and off planes, and when our tourism picks up, it has to start, especially international tourism, of people landing in San Francisco airport. So that's an indicator of that.
WERTHEIMER: Some economists are not sure that this highly localized urban data makes sense to use because they think it's volatile. What do you think?
Mr. EGAN: It's right to be cautious, to say this could be a really volatile indicator, but it makes sense to just watch it and see. You know, frankly, our parking garage information has been less volatile than the sales tax information itself.
WERTHEIMER: You know, some economists have sort of talked about indicators like the Big Mac, whether hemlines go up or down, the famous men's underwear indicator that Alan Greenspan talked about. I assume that you must have some of those too. I mean, people are proposing things that just sort of sound silly.
Mr. EGAN: We don't have great access to how much men's underwear is sold in San Francisco.
(Soundbite of laughter)
Mr. EGAN: I am for whatever works, right. If it's a good statistical predictor, and you can make a rationale for why it would explain things, I think there's a lot of wisdom in those things, and I think that if the statistics show that it works, you need a pretty good reason to tell me why you shouldn't look at it.
I really do think sifting through data, finding out what's a valuable indicator and looking at that just gives you so much more perspective on things that it would be really silly not to take a look at as many sources as you could.
WERTHEIMER: Ted Egan is the chief economist in the San Francisco Controller's Office.
Thanks very much for helping us out with this.
Mr. EGAN: Oh, certainly, it's been a pleasure.
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