As an aspiring economist in college, I once took a class taught by James Medoff, a renowned Harvard labor economist. Medoff promoted the merits of tracking something called the Help-Wanted Index (“HWI”) as a leading indicator of the U.S. economy.
The HWI was a monthly index developed by The Conference Board which tracked help-wanted advertising in more than 50 major newspapers across the country. The underlying theory was that monthly movements can provide valuable insight into the general strength of the economy by first understanding labor trends. These trends would correlate to wage increases/decreases, inflation/deflation, and interest rates, which obviously have direct implications on the major stock and bond markets. As an example, a dramatic decline in the index might have suggested to you that there’s a drop in the demand for labor across the board, perhaps lower wages being paid, and maybe even an economic downturn on the horizon.
Sadly, after 57 years in existence, this past July, The Conference Board decided to discontinue the HWI. It seems the HWI’s time had come and gone, driven mostly by the advent and popularity of online employment recruiting that renders help-wanted advertising in newspapers relatively expensive and obsolete.
In lieu of the HWI, let me (only semi-seriously) suggest a home-grown index that might also serve as a valuable barometer on the economy: I call it the Networking Event Invitation Index (or the “NEII”). The NEII is still in its infancy and at this point based mostly on anecdotal evidence and thin statistics, but let me spin it here for you: The number of networking events, seminars, conferences, and forums being hosted by firms seems to be inversely related to the performance of the overall economy.
Over the past 6 months, as the economy has soured, my email inbox has seen a steady increase in invitations to everything from interactive panel discussions on the state of the credit markets to webinars on enhancing your company’s growth in turbulent markets. In fact, just in the last week or so, I received 30-plus unique invitations to sign up, attend, or call/log into some event or presentation touching on some aspect of this recession we’re in.
Out of curiosity, I did a little data mining in some archived emails from a year ago and found that the NEI2 is up over 50% from the same time last year. Maybe this is simply a statement about my email address finding its way onto countless blast lists. Or maybe it reflects something more. Perhaps more companies are very concerned about 2009 pipelines and are exploring the networking event as a channel for strengthening relationships and deal generation. Perhaps we all have more time on our hands to pursue business development initiatives as our businesses have slowed. Perhaps these difficult times present a more interesting subject matter to build an event around. Or perhaps it’s all of the above.
Now don’t get me wrong, I like a good networking event as much as the next person, especially one that piggybacks the event with a free meal or, better yet, an open bar. But I’m certainly going to keep an eye on the NEII because when the index starts to head the other way, I’ll know that better times are just around the corner.
Mike Kent is a Vice President at Covington Associates, and this post first appeared at Covington’s blog.