Coffee as a leading economic indicator

A recessive economy is no match against the steaming morning luxury that fuels the pulse of the city. Consumers pinch their pockets for the morning Cup O’ Joe, even during economic strife, but the foam-topped coffee can get expensive overtime.


Folks that are willing to spend as much as $6 a day on a morning beverage is a curious concept in a struggling economy. Spending habits on coffee are inextricably linked to an established morning routine. Coffee drinkers are creatures of habit. The coffee drinker views the cup as an inseparable part of the daily ebb and flow of life. Coffee sales outside of the home skyrocketed in 2004, likely due to the success and popularity of popular corporate coffee houses. Coffee transformed from an in-home treat to a fast food experience.

Over the past decade coffee consumption outside the home has shown some reaction the the nation’s economy. In 2001, coffee consumption outside the home was in the low 30% range as the nation entered the economic recession. Ryan Sweet, a U.S. economist for Moody’s Analytics alludes that a low coffee consumption percent is directly correlated to a high unemployment rate. In 2004, when the U.S. unemployment picture turned around for the better, outside home coffee sales soared from 29% to 40%.


Coffee Consumption Outside of the Home

YEAR 2001 2002 2003 2004 2005
Outside Home 32% 34% 29% 40% 39%
Unemployment 4.7% 5.8% 6.0% 5.5% 5.1%
Economic Climate Backdrop Recession “Jobless Recovery” ” “ “Unemployment Improves” ” “
YEAR 2006 2007 2008 2009 2010 2011
Outside Home 40% 33% 36% 35% 30% 27%
Unemployment 4.6% 4.6% 5.8% 9.3% 9.6% *9.1%
Economic Climate Backdrop ” “ Recession ” “ ” “ “Jobless Recovery” ” “

*Seasonally adjusted unemployment rate for month of July from Bureau of Labor Statistics

Source: National Coffee Association of USA for coffee consumption in the home and outside of the home; Bureau of Labor Statistics for annual average unemployment rate figures; Economic climate backdrop Moody’s Analytics.


According to one economist, however, coffee will only suffer in the most serious times, and is considered as necessary as the utility bills and automobile gas. Most coffee houses are doing as well as they ever have, and according to Verner Earls of Chauvin Coffee Company, some coffee houses have reported record sales. “People aren’t going to give up the latte,” claims Verner. “Bigger expenses will go first.” The mindset behind the consumption of coffee allows coffee houses to weather recessions well.

This general trend for coffee consumption does not leave all coffee houses safe. Many local shops struggle with a crunched economy, as well as corporate coffee chains being forced to close down stores. In 2008, during the heat of the recession, Starbucks Coffee announced it will close 600 stores across the United States, according to the New York Times. This move by Starbucks cost over 12,000 employees their jobs, the most in its history (via the New York Times).

The fall of Starbucks in 2008 reveals that java sales are a hot economic indicator of the state of the economy. As the dollar collapses, so does the average American’s spending power.

Coffee has become a fast food luxury treat, all of which its raw materials: sugar, coffee, milk, wheat, and chocolate are all skyrocketing in price due primarily to the fall of the dollar, according the the Huffington Post. This hike in prices causes the cup cost to steadily rise.

Coffee sales, specifically using the example of Starbucks Coffee establishments is a prime example of how a falling dollar will make something like coffee, an item that Americans gorge on, daily for that matter, too expensive to include in the morning ritual.

Speaking from experience, a trip to a coffee shop is an absolute treat that I enjoy frequently with my mom. So much so, that we budget our social coffee hour into our weekly expenses tough economy or not.





Global Green Economy Index (GGEI)

After years of discussions about issues such as climate change, air pollution and resource shortage, sustainable development has become a popular concept that many countries want to improve. Some countries really are trying hard. Germany, for example, has been working everywhere from enhancing sustainable transportation to increasing citizens’ involvement in green policy. But there are also countries which think they are doing enough, yet actions don’t come close to making up for the damage that their economy does to the environment.

It’s interesting that our countries never get tired of competing with others. Imagine a flock of children are trying to prove to their mother, that who’s the one that loves her the most. Some make a lot of money; some take good care of her. In this case, the mother (the earth) doesn’t speak, so we need judges.

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The Global Green Economy Index (GGEI) by Dual Citizen LLC is designed to measure and rank countries’ performances in the green economy. In other words, this is a real indicator of how well countries are treating the environment. GGEI was first published in 2010, and has been acknowledged as one of the main indexes to rank national performances of green economy.

There are two sets of ranking: perception and actual performance.

The perception survey is conducted based on the respondents’ assessment on their own green economy performance. The actual performance is evaluated by expert practitioners. Both results were based on the same set of indicators which lie under four main categories: Leadership & Climate Change, Efficiency Sectors, Markets & Investment and Environment & Natural Capital.

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The latest 2014 GGEI report evaluated 60 countries’ performance based on the above categories. Sweden, Norway and Costa Rica are winners of the first three places.

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While most of the nations have similar ranking between the two, there are countries that show significant difference. For example, United States is 6th in perception and 28th in actual performance. China’s perception ranking is 13th yet its actual performance ranking is 55th.

Obviously, the fastest growing economy did not reach its expectation at all. What went wrong? If we break down the four categories, China is investing heavily on the green market, but its efficiency definitely needs to be improved. Environment & Natural Capital is China’s weakest categories, everybody in and away from China wonders when people would be able to breath in Beijing without worrying getting sick. What can the government do to bring this score up? Perhaps that’s what China will get inspired by reading this report.

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GGEI is an important communications tool for policy makers and international organizations, because it is a good reference point. While most countries share a common goal of maintaining a healthy environment, GGEI provides criticism and reflection on different aspects. It helps countries to realize what is working out and what more needs to be done.

The 2016 GGEI report will be available in the fall, according to the Dual Citizen website.

Economic Indicators: Beer

Economic Indicators: Beer

Image result for beer

The world’s economy is constantly changing and while people commonly use economic indicators such as GDP, unemployment rates, etc. to gauge the economy, other surprising measures can be decently accurate. One interesting economic indicator is beer. When the economy is good beer consumption at restaurants and bars are relatively stable/high. However when the economy is slower, beer consumption also slows down. The reason for this shift is that when people have less spending money they generally go out to eat less and even when they do eat out they are less inclined to purchase drinks at dinner. Similarly people may frequent the bar less and if they do go to the bar they might drink before hand or purchase less drinks at the bar to save money. Instead they might purchase beer at a grocery store and drink it at home or forego drinking entirely. People are less likely to spend money are items that are not considered necessities. The consequences of declined beer consumption affects more than just bars and restaurants. It affects the waiters and waitresses at the bar and the breweries themselves. The waiters make less money and tips, which affects their purchasing power. The breweries may also earn less revenue due to decreased consumption. As a result they may slow down production and produce less beer. This could also have a domino effect on their employees if they no longer need as many workers to sustain the demand on their products. All these consequences also affect tax revenues. The government will not be able to collect as much tax revenues if less product/money is being earned.



Mosquito Bites: Painful For The Economy as Well

No one likes mosquitoes. They act as irritants and leaches, using individuals and animals to survive. Now, there might be an even greater reason to dislike them; they also hurt the bottom line. Recent studies have indicated a correlation between the incidences of mosquito bites and a straggling economy. The greater number of mosquito bites, the worse shape the economy is in.

The theory behind this concept is exemplified in the great recession. Since real estate was at the forefront of the economic plunge, many individuals lost their homes or failed to maintain them. All of these foreclosures left thousands and thousands of abandoned or ill maintained properties. Without anyone to maintain the homes, and more importantly the pools,  the water turned stagnant in various locations. Combine that with certain humid climates, and these pools became nesting sites for mosquito breeding.

A Green Pool in Las Vegas

For instance, in Maricopa County, Arizona the unattended ponds and pools have become “green pools, according to authorities.” These pools are the ones where water has gone stagnant due to various levels of negligence, a lack of care driven by market forces. In 2009, 4,000 “green” pools were attended to by crews treating the stagnation. By comparison, only two years earlier the number was closer to 2500. This almost 60% jump correlated closely with an area that was hit extremely hard during the recession.

In areas where building was in a boom, many new developments placed pools in the backyards of individual homes. When people could no longer afford to maintain these pools, and for some, even live in the homes, mosquitoes swarmed.

In short, when the economy is bad, and people have to make hard financial choices, giving up pool maintenance is a necessary cut. The more pools across the country that go untreated, the worst shape the economy is in and the more homes mosquitoes find. So, if you hear more buzzing and see more bites, it is not just those small red dots you have to worry about. It could be a sign of great economic struggle on the way.


Cleaning up the mess



Unexpected Indicators


And The Gold Medal Goes To… The Economy


Every two years a country from anywhere in the world is strategically chosen to host the Olympics. I say strategically because being given the honor to host the Olympics greatly effects a country’s reputation, residents, and, most importantly, its economy. Therefore, to account for this major event, economists at Bespoke Investment Group came up with the Olympic Indicator to measure the state of the economy during this exciting time.

The Olympic Indicator shows that markets tend to prosper during the Olympic games. Bespoke Investment Group explains this by saying that the excitement of the USAs-Simone-Biles-poses-with-her-gold-medalgames distracts investors from problematic economic data and headlines. Bespoke confirmed this notion by tracking the Dow Jones performance during the Summer Olympics between the opening and closing ceremonies since 1900. Their results; positive returns in 18 of the last 26 games.

This summer in Rio de Janeiro marked the 31st Summer Olympics. However, ct-zika-virus-olympics-rio-20160128there were a lot of concerns leading up to the games on whether Rio could afford the Olympics, issues with their government and city safety, the presence of the Zika Virus, issues with severe water pollution and if the Olympic buildings were even going to be finished on time.

However, with all these problems, the U.S. economy still seemed to benefit from the games. By looking at the chart below it is evident that the Dow Jones Average spiked from 18.352.05 on August 4 to 18.543.53 on August 5, which was the day of the Opening Ceremonies in Rio. Although the average fluctuated during the Olympics, ever since August 21, the date of the Closing Ceremonies, the average is almost back at where it started on August 4.

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Although the Dow Jones Average shows that the American stock market did improve during the 3 weeks of the Olympics, the Olympic Indicator does not actually prove that the games distract investors. Therefore, the economic growth that occurs during the Olympics can also be explained by looking at the money that is entering markets around the world. For example, NBC Universal paid $1.2 billion for the right to broadcast the Olympics in Rio, which is chump change to Rio’s estimated $12-20 billion they spent on hosting the games. All of this money promotes consumer spending and puts money into the economy that was not there before, which in turn, betters the economy.




Commiserating Financial Pain: Online Dating as an Economic Indicator


As people become vulnerable with their pocketbooks, do they become vulnerable to loneliness as well? Statistics from online dating sites demonstrate that tough financial times correlates with higher numbers of people surfing the web for someone to commiserate their pain with.

These findings are supported by various online dating sight’s financial and user data.’s website traffic and quarterly results reported having the busiest site traffic during 2008’s turbulent financial crisis. They additionally reported their best fourth quarter in seven years during 2008, the same time as the Dow Jones reported a five-year low (HCPLive). This data differs from previous Novembers, which are notorious for being a particularly slow month for online dating sites.

According t0 Perfectmatch CEO Duane Dahl, the turbulent economic period after 9/11 and the end of the dotcom bubble led to a 200 percent membership increase. Dahl credits this hike in numbers to the public’s desire to find comfort in a partner, either to console their financial stresses or solve them. The poll, sponsored by eHarmony, shows that respondents those who said they felt stressed by the current economy were 14 percent more likely to aim to be in a long-term relationship within a year, compared with those who were not stressed by the economy (Time Magazine).

Though there are numerous potential explanations for this phenomena, off site dating experts have contributed them to 1) more time spent online and 2) loneliness heightened by stress. Theoretically, tougher economic times results in people staying home more often. This inevitably results in people spending more time on their computers, clicking away at their potential matches on online dating platforms. At only $35 a month, online dating is cheaper than blind dates as well, making it a more viable option for those on a budget. Whilst the public turns to online dating to find their next relationship, economists can turn to their membership numbers to determine the status of the economy.



Marine Advertisement Intensity Index

blog 1.2It’s a bad economy. Job searches have not been successful. Young people are running out of options.

What can they do?

Perhaps joining the military is not a bad idea.

This may have been a thinking process for the youth during recession in the U.S.. In 2011, non-profit research organization National Priority Project (NPP) has published a military recruitment research for 2010. According to the NPP research, there was not enough data to prove a correlation between unemployment rate and recruitment rate. However, it does infer how the poor economy may drive youths to think of military as a career option.

According to NPP, the accession rate increased from FY2009 to FY2010, which indicates how more people wanted to join the military. By the FY2011 recruitment period, the US military already fulfilled the whole year’s recruitment demand and the half of FY2012’s recruitment goal. Comparing NPP’s analysis and the U.S. unemployment rate from U.S. Bureau of Labor Statistics, the correlation between the unemployment rate and demand for youth to join the military seems to make more sense. Looking at the unemployment rate trend from the end of 2009 to the beginning of 2011, the unemployment rate fluctuate between 10% and 9%. Considering the recruitment dates starting on September-October period, the unemployed youth may have felt hopelessness on looking for jobs; consecutively, they thought of enlisting.



As mentioned above, the recruitment goal for FY2011 overfilled the government’s demand. Consecutively, the government would want less recruits on next recruitment period. Of course, there the other factors influencing the military recruitment. For instance, 9/11 incident inspired many young Americans due to the rising patriotism. Yet, the recruitment goals by the year of 2005 supports correlation between unemployment rate and enlisting rate because the goal “had fallen short of its 80,000-person” according to New York Times.

To meet the recruitment goal, the U.S. military needs either inspire or scare to influence the American youth so the recruitment goal is met. There is a myriad ways to influence the public, but Business Insider and New York times theorized how Marine Corps advertisements may be the economic indicator that speaks about the correlation between unemployment rate and enlisting rate.

Business Insider and New York Times suggest that the intensity of Marine recruitment advertisements can be a measure of economy. The general concept goes something like this: when people cannot find suitable jobs due to bad economy, the Marine Corps terrifies the potential recruits with intense imagery in the advertisements because the Marine Corps does not want too many recruits. Though there is no easy to measure the intensity of the advertisements due to its qualitative nature, it is certainly interesting to look at in the light of communication.

Marine Corps The Climb YouTube3

“The Climb”

The proof Business Insider and New York Times provides is the comparison of advertisements after and before the year of 2002. In 2002, the Marine Corps released an advertisement called “The Climb”. The advertisement showcased a man rock-climbing on a cliff. As the man ascends, the imagery of deployment, courageous Marines, American flag, troops helping people in needs, and many patriotic symbols appear on the cliff. At the end of the climbing, the man sees himself in the Marine uniform. The man gets picked up by himself in the uniform and they emerge into a proud Marine with a halo his back. Watching “The Climb”, being a Marine does not seem to be a bad idea. After watching the advertisement, it does not seem to matter how hard the training is because being a Marine looks like the most worthwhile occupation in the world. This advertisement highlights the slogan of Marine Corps “The Few, The Proud” because the advertisement sends powerful imagery to state how every recruit can become a proud Marine after a rigorous training and self-development.

The advertisement on the 2002 definitely seems to attract many recruits. On the year of 2008, however, the advertisement changed the look of military. Preparing the next fiscal year, the Marine Corps released “America’s Few” advertisement. The advertisement starts with young men from different backgrounds. They rally at the same location and the scene shifts to the series of hardcore training the cadets go through. The commercial shows the images of very intense training such as rope climbing, diving into the water with full battle gears , getting exposed to tear gas, training in the mud, getting thrown into the hand to hand combat with no protective gears, war simulations, and rigorous combat practices.

United States Marine Corps America s Few YouTube

“America’s Few”

Towards the end of the commercial, the narrator says that only a few can earn the title of proud Marines. Compare to the 2002 commercial, the advertisement on 2008 highlights how selective the Marine Corps is on picking its candidates. The images of trainees in pain from the training were repeating throughout the commercial. If the 2002 commercial was about the glory of becoming a Marine to attract many candidates, the 2008 commercial was definitely about influencing potential candidates to be hesitant on enlisting. On the year of 2009, the unemployment rate was 9.8% on September. In other words, there may have been a need to reduce the number of candidates to the Marine Corps as the unemployment rate rose; hence, “The Few” was more emphasized in the commercial than “The Proud”.


Of course it is not an accurate measure because the intensity can be subjective; however, the Marine Corps advertisement intensity index certainly has a value of studying. It definitely reflect on how the government communicates with people for the supply and demand. Just as other economic indicators influence how people feel about economy, Marine Corps advertisement intensity index influence how people feel about the government’s demand and supply.


The Curse of the New HQ

And then he said…”we’re moving!”

In America, the taller the skyscraper, the more successful you are. As companies blossom, it is not unusual for CEO’s to announce moving on to bigger and better things. However, the fate of these companies is often destroyed by the terrifying curse that haunts those with lofty goals of a shiny new building.

Economic indicators are all around us. Unemployment, GDP, and CPI are the ones that grab our attention but because our economy is so massive, it is easy to miss the little signs here and there. So why would moving to new headquarters be problematic when business has never been better? In many of these cases, the company did not properly attempt to look into the future and consider what could go wrong. Nonetheless, for some of these companies, they never could have predicted bleeding money for years after the fact.


Back in 2000, The New York Times doubted the strength of the internet. Although it was clear as day that the world would never be able to turn its back from the internet, what wasn’t clear was the fact that more accessible news lead to lower print sales. By 2007 they should have figured it out but alas, they still moved into shiny new building which led to an extremely uncomfortable financial situation. Let’s just say the accountants went gray real quick trying to crunch those numbers. The only solution was to sell the building and hope for the best.

MySpace? What’s that? Oh right that social media site that got destroyed by Facebook. Thanks Zuckerberg. In 2008, MySpace naively believed they would continue to dominate. Naturally an upgrade was necessary to house the increasing amount of employees. Of course, MySpace declined quickly after moving to new HQ, and today MySpace is owned by Time Inc. It technically still exists but as an entertainment site for music and videos rather than social media.

In these cases, perhaps the outcome of losing money could have been foreseen. However, one must remember the economy is its own animal. The ebb and flow of the market cannot be controlled as much as we like. In business, risk is unavoidable and therefore moving to new HQ isn’t the worst idea. The issue is timing. The curse will remain for all those eager CEO’s trying to jump ship because it is an enormous risk to take. Only the lucky few will go on unscathed, all we can do is watch preferably with popcorn and economic outlook sheets in hand.

The Happier, The Better

Since the early 2000s, several scientists have found that happiness can be used to predict the likelihood of developing coronary heart disease or even the strength of one’s immune system. Similarly, economists are finding happiness to be an effective indicator of the health of a country’s economy.

Based in its rich Buddhist heritage that stresses the accumulation of happiness over material goods, Bhutan was the first country to measure its economic might and societal wellbeing using the Gross National Happiness (GNH) instead of its more conventional cousin the Gross Domestic Product (GDP) in 1972.

A country’s GNH is a numeric value assigned based on nine categories: time use, living standards, good governance, psychological well-being, community vitality, culture, health, education, and ecology. The general of level of happiness in a population can indicate a high level of confidence in the economy which in turn increases consumer spending, a hallmark of a thriving financial system.

There is debate over what levels of happiness mean for economics and business cycles. Some economists claim that higher GNH indicates a stronger economy while others argue the exact opposite. The graph above indicates a decrease in happiness as growth begins to pick up, a trend that may be explained by greed. Perhaps as people become more successful, they develop an insatiable appetite for more wealth.

However, Gallup polling in over 150 countries from 2007 to 2013 found that as national happiness decreased and national suffering increased, nations become more unstable which decreases investor confidence sending shockwaves through the economy. The graph below demonstrates wealthier countries, generally nations with stronger economies, are more likely to be satisfied than their less wealthy counterparts. Similar to how high levels of dissatisfaction leads to instability, high levels of satisfaction can be seen as a reaction to and help perpetuate stability in markets by encouraging investors to invest and consumers to spend.

The Gross National Happiness is by no means a flawless indicator of economic strength. More than anything, it shifts national focus away from numbers to potentially more worthwhile and feasible gains. As we deplete natural resources at an ever-growing rate, focusing on achieving goals that emphasize positive emotions over material goods – especially when considering near stagnant economic growth in many industrialized nations – might be worth taking seriously.


Dumpster Diving for an Economic Indicator

You have probably heard the old saying, “One man’s trash is another man’s treasure,” more times than you can count. When I hear it, I think of uncovering some gem at a garage sale or, as my roommates in New York once did, finding perfectly usable bunk beds stacked on the curbside trash pile. But, would you ever consider using trash as a tool to measure the strength of an economy?

Economic indicators consist of wildly varying selection of measures, but one of the most well known measures is a nation’s GDP or Gross Domestic Product. The GDP measures the size of a nation’s economy. One major component of GDP is how much stuff people consume. Organizations track this by keeping tabs on the sales numbers for basic items such as clothes and food, and all the way up to large ticket purchases such as homes and cars.

The US definitely loves buying stuff. Consumption made up about 68% of the American GDP in 2014, according to the World Bank, which makes it by far the strongest and heaviest member of America’s economic family. And what’s the natural by product of our America’s insatiable appetite for stuff? Well, that would be waste. This leaves us with an obvious question: can we look at the amount of waste we produce to learn how our economy is performing?

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Back in 2010, Bloomberg economists Michael McDonough and Bob Willis investigated that very question. No, they didn’t go around weighing garbage bags or following trash trucks. Instead, they measured how many train cars of trash traversed around the country. The American Association of Railroads tracks figures on the amount of steel and iron waste created, as well as municipal waste that cities, such as New York and Seattle, throw on trains headed out to landfills in other states.

They learned that by looking at these numbers one could determine growth or shrinkage of the economy. Bloomberg studied a period beginning in the first quarter of 2001 until the same period in 2010, and found that the number of cars carrying waste had a correlation of .82 with the growth of GDP, meaning that they grew in a nearly synchronized manner. Makes sense right? The more things created and consumed, means more things that are replaced, go bad or end up as leftovers in the process.

This chart, from Bloomberg in 2012, illustrates the strong relationship between our trash and our GDP dating all the way back to 1994:

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In a 2012 interview with Market Place’s Kai Ryssdall, McDonough described why measuring waste gives such insight into the growth of the economy. He said, “It’s holistic because it’s not isolated to a single part of the economy. It’s people throwing things out, it’s buildings being demolished — it’s everything… I mean, if you’re going to build a new building, there might be a building that’s already there. If you buy a couch, you might be throwing out an old couch. If you go out to McDonald’s and you buy something, you’re going to throw something out. ”

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The only problem with this measure is that looking at waste will not tell you much about the future, but instead about what’s already happened. As waste comes about as the end product of consumer decisions. Even McDonough admits, “it’s more of a lagging indicator.” Though the AAR’s figures do become available before the BEA can calculate our GDP. So a slight advantage does exist for the particularly ardent trawler of trash stats.

Sadly though, it appears that anyone hoping to amass a fortune from tracking trash probably won’t uncover too much treasure.