Leading, not misleading
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Published: March 9, 2009
Economists like to discuss "leading indicators" when trying to predict what's going to happen to the economy two months or two years from now.
The utility of leading indicators — things like building permits, supplier deliveries to manufacturers and consumer expectations — is that they go down before the larger economy does in bad times and then come back up quicker in good times.
The Conference Board noted mixed signals in February as to whether the leading indicators suggest we may be at or near the bottom of the recession. Its next report is due on March 19 and will undoubtedly be widely reported in the financial media.
Vermont happens to be sitting on another leading indicator: Omya, the calcium carbonate producer.
Having replaced such varied materials as lead for emulsifying paint and chlorine for whitening paper, calcium carbonate is used in a huge variety of manufacturing processes in industries pretty much across the board.
This makes it something of an index for economic health. While, say, softwood sales tell you a great deal about the paper and housing markets, they are mute as an indicator for durable goods.
But calcium carbonate goes into plastics, cement, ceramics and sealants. It is used in iron smelting and oil drilling and in finished products from diapers to latex gloves. A serious dip in the calcium carbonate business means manufacturers across the country aren't building much of anything and they aren't planning on building a lot more of anything anytime soon.
So news this week that Omya was laying off 12 staff members was not only bad news for the workers and their families, but serves as a reminder that negative economic news is going to be with us for a while.
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