14

Tracking the economy and GDP through trash

A truck empties its load of waste at the Shelford Landfill, Recycling & Composting Centre.

Kai Ryssdal: Sure, there were some economic numbers out this morning. First-time claims for unemployment benefits: Meh. And housing starts: Also meh.

But how 'bout this? Trash. Garbage. Waste. Refuse. Therein, my friends, lies the economic truth. It came to me in a chart I saw online the other day -- railroad carloads of trash, as correlated to GDP. And the correlation is pretty close, too.

Economist Michael McDonough has worked out the GDP-to-trash indicator. Welcome to the program.

Michael McDonough: Hey, thanks for bringing me on to talk trash.

Ryssdal: Yeah, that's right. Explain to me how this works, because it's not like iron and steel -- which are the biggest components of all this stuff -- and demolition. It's not like that has anything to do with consumers buying more stuff and then throwing more stuff away.

McDonough: That's what's great about this indicator. It's holistic because it's not isolated to a single part of the economy. It's people throwing things out, it's buildings being demolished -- it's everything. The current levels are indicative that you may be seeing a weakness in new construction. I mean, if you're going to build a new building, there might be a building that's already there. If you buy a couch, you might be throwing out an old couch. If you go out to McDonald's and you buy something, you're going to throw something out. So the fact that it is as weak as it is right now means something's wrong in the economy, potentially, in the underlying economy.

Ryssdal: So what kind of trash we talking here? Is this everyday household waste?

McDonough: You know, it's a whole mix of trash, actually. What you have is almost half of what the trash is iron and steel waste, and then the next biggest component is your demolition and your municipal waste. So places like New York City, Seattle -- these guys are putting a lot of their trash onto trains, shipping it out to other states, and then dumping it there.

Ryssdal: And we should say that's where the data comes from, right? You get it from the American Association of Railroads or something, and those guys actually measure carfuls of stuff?

McDonough: Exactly. On a weekly basis -- that's what's even more interesting about it. When you think about the concept of using trash as a proxy for GDP, it's not a leading indicator. If anything, maybe it's a slightly lagging indicator, because you have to wait for people to throw things out, possibly. More than likely, it's a coincident indicator. Except, you know, for GDP, you need to wait a month or two after the quarter ends before you actually get that figure.

Ryssdal: All right now, did this come to you in the middle of the night one night? Why are you tracking trash, man?

McDonough: When I was in college, as a side project I guess you'd call it, I studied a lot of anthropology and archeaology. And one of the ways you can track ancient people migrations in the size was how much trash they left as they moved from point A to point B. So everything just kind of came together. I found the data, I ran the numbers, and it made a lot of sense in my mind.

Ryssdal: Michael McDonough, he's a senior economist at Bloomberg Briefs. We got him in Hong Kong. The graph that we're talking about, it's kind of crazy, the correlation. Michael, thanks a lot.

McDonough: Thank you.

Ryssdal: Mike said there's something wrong in the underlying economy? As bad as it's been since Lehman brothers is how wrong is what he figures. Have a look yourself at the chart above.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
Log in to post14 Comments

Pages

Well...continued here. Posted before the final point. It's not just recycling. It's asking how people are relating to "stuff." Inventory management may be a lot more efficient so that businesses are not getting rid of products in their dumpsters. Lifestyle changes with globalization may be shifting: globe trotting professionals eschew a material existence in the picket fence and a suburb way, but load up on technology and apps that permit them to travel light and stay connected. Which brings us to that part of the economy that is not "stuff," such as Facebook and apps to do banking. It's wonderful to see anthropology inspiring economists. Holistic questions used by anthropologists may support or refine this interesting research.

As a veteran trash picker I have long used the curb as an economic indicator. When times are good the trash is abundant with money to be made. When times are bad, not so much. The last year, even in my rather tony neck of the world, has not been good at the curb. Still balancing the cost of gas vs. the treasures and always looking - my results tell me the bloom is off the rose. Times are tough; there is competition and the scavenging is not great.

Just did a renovation, all the metal got recycled, old appliances on the curb lasted maybe 1 hour. There are a lot of people out there picking trash for scrap, or recycling. Seems like a great indicator.

The University Of Arizona in Tuscon anthropology department conducted trash searches for many years. Local trash was analyzed and recorded. The relationship between trash and the economy is detailed at length.

Pages

With Generous Support From...