Garbage, Our Leading Economic Indicator

Amidst the durable goods orders, and factory output analyses and aging inventory evaluations that typically are the focus of the dismal science, there lurks an economic indicator that is highly accurate and smelly, too — garbage.

A study has concluded that, of the 21 categories of items shipped by rail, the one that has the highest correlation to Gross Domestic Product is garbage.  Trash has an 82 percent correlation to economic growth.  The correlation is logical, and obvious, because the more people produce and purchase, the more they throw out.  So, if you want to assess how the economy is doing, keep an eye on the volume of refuse collected by your friendly neighborhood garbagemen.

Unfortunately, the garbage indicator isn’t predicting good economic news — carloads of waste are way down.  We’ll just have to keep our fingers crossed that the decline no longer accurately predicts economic activity and instead reflects that our neighbors have finally gotten serious about recycling and composting and other trash-minimizing activities.

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