Watching the way that people have been keeping close track of the Dow Jones Industrials Average, I’ve often wondered what it is about that particular statistic that captivates the mind. People watch the Dow in order to try to get a sense of how the economy is doing, but the economists I’ve heard talk about the matter say that the Dow’s performance isn’t in itself a reliable indicator of the health of the broader economy we all live in. There are huge areas of economic activity that aren’t represented by the Dow, or any stock market for that matter.
Still, people want a number. So, here’s a number: I’m calling it the Irregular Index.
It’s computed by taking the price of coffee on commodities markets, adding that to the price of silver, plus the price of rubber and the price of lean hogs, divided by the stock price for California Pizza Kitchen.
So, the Irregular Index for this morning, before markets open, is: 92.04
Boy, that tells you everything you need to know about the economy, doesn’t it?
Will the Irregular Index go up or down today? Stay tuned…
Update: The Irregular Index has dropped today, down to 91.35. That’s almost a drop of one percent!
Panic! Do you realize what this means for your life?
Second Update: What a relief! The Irregular Index has surged back to recover from the losses of earlier in the day. As of 1:00 PM Eastern, the Index has rallied back to 93.32. Is this a sign that the recession will be shorter than previously believed?
Third Update: Cancel the 700 billion dollar bailout! The economic recovery is underway. The Irregular Index is now at 98.56. That’s a 7 percent rally from where the Irregular Index stood just this morning. You can ask for a raise now. Have you gone out and bought your second home yet?
Final Update: Off slightly from its high today, the Irregular Index has nonetheless made impressive gains today, ending at 97.11. What does this teach you about the American economy? Well, at least as much as watching the DJIA fluctuate throughout the day would teach you.