Is trash a good indicator of the economy’s health?


It may seem surprising, but there’s truth in numbers: Trash could be a better indicator of the economy than food or gas.

On The Ed Show Tuesday night, guest host Ezra Klein highlighted a study that shows an extremely tight correlation between carloads of trash dumped per year and the U.S. GDP.

Economist Michael McDonough’s research shows an 82.4% statistical correlation between the two since 2001. Compare that to the correlation between GDP and lumber (73%), GDP and petroleum (72%), and GDP and food (49%). McDonough explained that trash might be a better indicator than the other three because “it’s not isolated to a single part of the economy.”

“It’s holistic because it’s not isolated to a single part of the economy,” McDonough told Marketplace. “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.”

Klein pointed out that the trash line in the graph takes a dive in the third quarter of this year—which, he says, could a) be a bad indicator for the future of the U.S. economy, b) show that trash has become detached from the GDP in this correlation, or c) show that the hypothesis really is “just garbage.” (His joke, not ours!)

Ezra Klein

Is trash a good indicator of the economy's health?