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PHIL HARDWICK — Useful bellwethers for Mississippi

PHIL HARDWICK

During this pandemic, there are daily statistics, trends, charts, and other data offered to the public.  It’s difficult to make sense of it all.

What’s the real current status? What does the future hold? Which numbers should we pay attention to? Number of cases, percent increase in cases, deaths per capita, hospitalizations per capita, or something else? Are there data that can reliably predict the number of cases? And if so, can it aid us in deciding which activities we should or should not participate in? What we need is a reliable bellwether.

According to the Merriam-Webster Dictionary, a bellwether is a leader, pacemaker or trendsetter. The term comes  from the Middle English “bellewether” and refers to the practice of placing a bell around the neck of a castrated ram (a wether) leading the flock of sheep. A shepherd could then note the movements of the flock by hearing the bell, even when the flock was not in sight.  In other words, a bellwether is something, that either leads or indicates trends or forthcoming activity or outcomes.  It can be an individual, a company, an activity, a place, or data.

To determine a bellwether for coronavirus infections it is useful to understand which actions or activities have the highest risk? The Texas Medical Association recently released a chart listing behaviors from low risk to high risk. Playing tennis and pumping gasoline (thank goodness) are at the low risk section of the chart. Going to a bar and eating at a buffet are in the high risk section. Eating inside at a restaurant is of moderate-high risk. Useful information, for sure.  The Texas Medical Association chart can be found online at –

https://www.texmed.org/TexasMedicineDetail.aspx?Pageid=46106&id=53977.

I came across an interesting article in the June 26, 2020 edition of USA Today that made a lot of sense regarding an activity that could be a bellwether. The activity? Eating in a restaurant. Jesse Edgerton, an economist with JPMorgan Chase, noted the level of spending in restaurants three weeks ago – most notably in-person versus online – was the strongest predictor of a surge in coronavirus cases during that time period. That makes sense given the risks mentioned above. His analysis was based on spending by 30 million Chase credit and debit cardholders. Also, Edgerton found that higher spending in supermarkets predicted a slower spread of the virus, suggesting consumers are practicing “more careful social distancing” in that environment.

Bellwethers are often found in the business world. Find a company that indicates a forthcoming economic activity and a company can gear up or down for what’s ahead.

Alcoa Aluminum, for example, is considered a bellwether for the overall economy because it operates in a cyclical industry, i.e. one that has cycles of expansion, peak, contraction, and trough. Also, it is the first major company to report quarterly earnings, and its report is considered a bellwether for the corporate earnings season. FedEx is also considered a bellwether for the economy. Strong revenues and earnings for FedEx suggest strong consumer and business shipping activity, which ebbs and flows with the strength of the economy. Caterpillar, which sells construction equipment is a bellwether not only for the domestic economy but also the global economy. JPMorgan Chase is an example of a bellwether stock. As one of the major banks in the United States, it sets the tone for the rest of the industry.

I asked State Economist Darrin Webb if there were any bellwethers his office tracks to make predictions and forecasts about the Mississippi economy. His response:

“We have a number of indicators that we track.  Because every data series has some problems, we have found that looking at multiple series helps us understand what is really happening.  Our monthly publication, Mississippi’s Business, contains many indicators that we have found helpful.   Some of the most important ones in my opinion include Income tax withholdings, U.S. retail sales, manufacturing workweek length, initial and continued unemployment claims, the manufacturing and non manufacturing ISM index, NFIB optimism index, consumer sentiment index.  These are all included in our monthly publication.  Additionally I look at foreclosure and delinquency rates.  I think MS retail sales tax transfers are a good indicator but the reported data lags retail sales (June transfers reflect May sales).”

There are also political/election bellwethers, one of the most common being counties. Nationally, presidential candidates play close attention to the following bellwether counties that have successfully picked winners over the years:

Valencia County, New Mexico – perfect since 1952 (longest current perfect streak); Vigo County, Indiana – 2 misses (1908, 1952) from 1888 on, perfect since 1956; Westmoreland County, Virginia – two misses since 1928 (in 1948 and 1960), perfect since 1964; Ottawa County, Ohio – one miss since 1948 (in 1960), perfect since 1964; and        

Wood County, Ohio – one miss since 1964 (in 1976), perfect since 1980.

Mississippi’s election bellwether counties include:

Chickasaw County, Mississippi – one miss since 1972 (in 1980);

Pike County, Mississippi – two misses since 1972 (in 1980 and 2016); and

Panola County, Mississippi – two misses since 1972 (in 1980 and 2000).

These are just a few examples of bellwethers. Whether it’s business, political, fashion, retail or personal services, bellwethers play an important role in planning for the future.

» PHIL HARDWICK is a regular Mississippi Business Journal columnist. His email is phil@philhardwick.com.

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About Phil Hardwick