Too Big to Fail? Too Fat to Fly?

From where I sit here in Blogadishu, it seems as though we're completely awash in economic indicators of one sort or the other.

There's the Consumer Price Index (CPI) and the Producer Price Index (PPI), which illustrate trends in retail and wholesale inflation, respectively.

We hear about the number of people who are working, hourly wages, jobless claims and the unemployment rate.

There are several housing related statistics: House price indices, the number of home sales (both new and existing), permits for new home construction.

We're told about the money supply as well, measured in several different ways.

One indicator I've always been interested in is the University of Michigan's Consumer Sentiment Index. Using 1966 as its baseline year (with an initial value of 100), this index attempts to measure the overall mood of the U.S. Consumer, using it as an indicator of future economic activity. This indicator, which rarely moves markets one way or the other, is nevertheless widely followed by the media.

While I appreciate the idea behind this index, I've long wondered about its ability to tell us anything. Sure, consumer sentiment is important, but I'm not sure that you can gauge it by simply asking people about how they feel. Wouldn't some sort of measurable action, on behalf of the masses, which indicated their feelings about the future of the economy, be a better indicator? But what form would it take?

Then, out of the clear sky, it hit me. Actually, fortunately, it just missed me.

The pigeons hold the answer.

Yes, pigeons. Those dirty, disgusting, ubiquitous, statue-soiling birds. The unofficial state bird of New York.

Several years ago, at the height of the economic boom, FBB and I noted how enormously fat the pigeons we saw in Manhattan were. They were obviously very well fed. Well, I noticed something interesting the other day. The Manhattan pigeons aren't nearly as fat as they used to be. Many of them are positively svelte.

This can only mean one thing. People are feeling a lot less secure about the economy nowadays, so they're tossing away fewer scraps. There's less for the pigeons to eat, so they're not as fat.

By creating an index of pigeon weight, or by measuring the proportion of fat pigeons as a percentage of the total visible pigeon population, we will have a quantitative indicator of how people feel about the economy at a given point in time.

I'll call it the Fat Pigeon Index (FPI), or perhaps the Pigeon Fat Index (PFI). I'm not sure which one I'll use. I'll be sure to trademark both names and acronyms, just in case.

It will take some time, and some empirical data, to determine this index's efficacy as a predictive tool, but at the risk of sounding immodest, I'd say that this Index represents the most important economic innovation since the Black-Scholes options pricing formula.

This is very exciting, and I could blog about it all night. I've gotta run, though. I need to practice tying a bow tie before the Nobel Prize presentation ceremony comes along.