Checking the malted index for sure signs of a recovery

ROGER SIMON

March 08, 1992|By ROGER SIMON

The American people are a happy people. Nothing can keep us down for long.

Even in the depths of melancholy, we look for the silver lining, the ray of hope, the bluebird of happiness.

And, for the last few weeks, the signs have been there. Here are actual newspaper headlines:

"Signs indicate a recovery is in the cards."

"Leading index, home sales jump."

"Something good starting in economy."

This could, however, be wishful thinking, I thought. The media, which were criticized for contributing to the recession by emphasizing gloom when it began, may be bending over backward to emphasize optimism now.

But then I opened up the latest dispatch from my Council of Economic Advisers.

My Council of Economic Advisers consists of Jeff Levin, general manager of Fields of Pikesville, who has an M.B.A. and law degree from Columbia University and makes the best chocolate malteds in the Eastern time zone.

About once a month, Levin takes the time to send me articles I don't understand. But he is always careful to accompany these articles with handwritten notes that I don't understand.

Here is how his note of March 1 began: "Monetary reserves have started growing and some economic bears are now predicting recovery this year. However, in my view, it's way too early to tell: The data is suspect and ambiguous. Talk of a capital goods rebound so far is just talk."

Yeah. Right. Just what I was going to say.

But then Levin sent me an article by John Liscio, who used to write for Barron's and recently switched to U.S. News & World Report. The article was headlined: "Cheer up, the recession is over."

"A funny thing is happening on the road to recovery," Liscio wrote. "Determined not to be fooled again by another false dawn, most folks are flat-out missing the bus."

Consumer confidence, as you may have recently read, is at a 17-year low. But Liscio thinks that's good news.

"The last time the news on consumer confidence was so bad was in January, 1975," he wrote. "Just weeks before that recession ended."

So I called Jeff Levin to see if people were running through Fields of Pikesville naked, throwing dollars into the air with joy and abandon.

They were not. Or not yet, anyway.

"Long term, you can't say anything has changed," Levin said. "But what may have changed is the amount of stimulus being provided to the economy at this moment. Which, not coincidentally, is an election year."

But things are getting better near-term?

"There are undersurface rumblings that near-term things may be getting better," Levin admitted.

And this Liscio guy is really optimistic, right?

"John Liscio has run against consensus thinking for well over a year and he's been right," Levin said. "And he has suddenly turned positive on the economy and says the recovery is coming."

But?

"But my view is that it's much too early to be convinced," Levin said.

Well, I know a way to tell for sure, I said. Your malteds.

"My malteds?"

Yes, people buy malteds when they are feeling good. When they feel lousy, they sip on colas to give them the jolt they need to face their miserable lives. So the more malteds you sell, the better consumer confidence is.

There was a silence on the phone.

So go and check how many malteds you are selling now compared with last year, I said.

"Are you serious?" Levin asked.

Absolutely, I said.

It took Levin about three hours to come up with the information. "And I had to combine malted and shakes," he said when he called back.

OK, I said. I will allow that.

"Well, January of this year was up 1.5 percent over January of last year," he said.

Hooray!

"But February was down 28 percent in malts and shakes from last February."

Our economy is doomed, I said. We are but dust in the wind.

"Not necessarily," Levin said. "My restaurant manager says people are merely more diet conscious."

See what I mean? The bluebird of happiness is always twittering somewhere.

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