Obscure economic indicator… cool…

Like everyone else a few people serious geeks econ geeks, I have an avid interest in unconventional indices that measure conventional economic phenomenon. For example, the Economist‘s Big Mac index — which develops exchange rates based on the price of a Big Mac in different countries — is a crude but pithy way of demonstrating the difference between market exchange rates and purchasing power parity. Even better, it accomplishes a pedagogical task that does not come easily to economists — providing an intuitive way to appreciate economic phenomenon. I bring this up because Daniel Gross has an excellent piece in Slate that details an interesting yet obscure leading indicator for economic growth — parking rates:

Moore began an effort to systematically assess the state of the national parking market. For five years, he’s been publishing an annual guide to the ins and outs of parking. If you want to know how much a monthly reserved spot in a covered garage in the Raleigh, N.C., central business district costs, check out Moore’s 2005 North America CBD Parking Rate Survey. But the survey doesn’t simply tell you how much it costs to stow your SUV in a garage in Milwaukee for a day ($7). It can tell us something about what’s going on in the economy?and about the relative health of the business and consumer sectors. Moore checks out the prices only once a year, but by keeping an eye on prices more frequently, sidewalk analysts might be able to get a leg up on some trends. The survey charts several rates in 58 markets?monthly reserved and unreserved spots, and daily parking rates. Moore believes that the price for monthly spaces?occupied primarily by commuting workers?moves in sync with the health of the office market. But the daily rates?occupied by theatergoers and shoppers, tourists, people attending conferences, and roving consultants?generally track the health of the broader, consumer-based economy…. parking rates can make a good economic indicator. Parking is a highly competitive business with lots of pricing transparency?as with gasoline, the price is generally displayed on a large public sign. Managers and owners thus have the ability and incentive to react quickly to changed market conditions. As a result, a spurt in growth or a sudden downturn is more likely to show up at the parking garage more rapidly than it would in a GDP number or a company’s quarterly earnings. If you see a rash of discounts on monthly reserved spots, it’s a sign that companies in the area may be doing poorly. Or if daily prices spike in a garage attached to a downtown retail complex, it’s probably good news for the companies inside.

My only objection is that I think Gross might be exaggerating the transparency — compared to gas stations, parking garages are most likely to have their Early Bird specials in big print to onscure their ordinary rates. Still, it’s a nifty metric.