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Fed confirms value of Retail Index by Larry Meyer
Has it been worth all the years of effort? A new report
from the Fed says it definitely has. The Fed chose to spotlight the Michigan Retail Index in
a Chicago Fed Letter issued this month. The letter goes to bankers, business-people,
the news media and college instructors and students, exposing many influential
economic players to the project. According to the Fed Letter, the Michigan Retail Index
fills a unique niche by providing retail statistics specific to Michigan,
based on members’ reports of current and projected activity. “Given that consumer spending represents two-thirds
of the U.S. economy, understanding retailing is an important part of analyzing
overall economic activity,” wrote Fed Senior Economist William Strauss
and Associate Economist Michael Munley. “While retail sales information
is readily available nationally, it is more difficult to obtain on a state-by-state
or regional basis.” In fact, when seeking to compare the Michigan Retail Index
with other assessments to analyze the survey’s reliability, the Fed
researchers found few comparable sets of data. For the inventories index,
they found only national statistics, while the promotions index had no
comparable data on either a regional or a national level. The new seasonal adjustment of the Index data smoothes
out seasonal variations and allows for better month-to-month comparisons.
Munley and Strauss found that the seasonally adjusted numbers correlate
well with other published data and have some value as leading economic
indicators.
Munley and Strauss concluded that the Index “is relevant
in signaling economic changes” and that “seasonally adjusting
the index will make it an even better tool for researchers and business
analysts in the future.” Bottom line: the Michigan Retail Index is one of the few
sources of in-depth information about Michigan’s retail industry.
What’s more, it has proved to be accurate in its assessment of the
industry and can even predict future economic trends. Your role, of course, is critical. You are the ones who
make the Index possible by filling out your survey postcard each month. If you don’t currently return your survey card, please
take the few seconds necessary each month to complete it. Responses are
completely anonymous. You don’t have to consult your books for an
exact response - your best estimate is all we need. Accurate economic information means better decisions by
government bodies on issues like changing interest rates and cutting taxes.
Those are issues that are important to all of us. Would you like to help shape economic policy? Start by
filling out your Michigan Retail Index postcard. We appreciate your help
in making this survey the best it can be. To read the entire Fed Letter analyzing the Michigan Retail Index, visit MRA’s homepage. |
For nearly eight years, we’ve been working with the
Federal Reserve Bank of Chicago to conduct a monthly survey that gauges
the health of Michigan’s retail industry. 
For
instance, their analysis showed that if retailers said they expected prices
or hiring to rise in the next three months, there was a strong tendency
for actual inflation and retail employment to be higher three months later,
as measured by the U.S. Bureau of Labor Statistics.