Who should Jean-Claude Trichet call?

September 21, 2009
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How is private consumption developing in the US? Alan Greenspan, the former Fed’s chairman, once said that if he wanted to find out, he would call Wal-Mart rather than wait for the official statistics. At Teradata, we took this as a compliment. We knew that Wal-Mart, thanks to its enterprise data warehouse, had a very accurate and timely view of its sales. Apparently, this reliable data included enough information to give Greenspan a solid idea of what the statisticians were going to say about the whole nation a little while later.

Over the past months, many decision-makers would have been glad if they had known a little faster what the real state of their economies was. Just take a look at the news: central bankers worry about deflation and monitor prices as tightly as they can. At the same time, some of the sages say that the economy is already recovering (beginning to grow from a very low level). Others say that what is improving is not so much the present situation but expectations about the future – a very changeable indicator. Now let’s say there suddenly was a new round of lay-offs in manufacturing. If you were a central banker, you would want to know the impact on

How is private consumption developing in the US? Alan Greenspan, the former Fed’s chairman, once said that if he wanted to find out, he would call Wal-Mart rather than wait for the official statistics. At Teradata, we took this as a compliment. We knew that Wal-Mart, thanks to its enterprise data warehouse, had a very accurate and timely view of its sales. Apparently, this reliable data included enough information to give Greenspan a solid idea of what the statisticians were going to say about the whole nation a little while later.

Over the past months, many decision-makers would have been glad if they had known a little faster what the real state of their economies was. Just take a look at the news: central bankers worry about deflation and monitor prices as tightly as they can. At the same time, some of the sages say that the economy is already recovering (beginning to grow from a very low level). Others say that what is improving is not so much the present situation but expectations about the future – a very changeable indicator. Now let’s say there suddenly was a new round of lay-offs in manufacturing. If you were a central banker, you would want to know the impact on consumer confidence. How would you find out fast? Who would Jean-Claude Trichet call? (The same question goes even more for Gordon Brown or Angela Merkel, considering that expansive government spending has a much faster effect on the economy than the lowering of interest rates.)

In a way, Alan Greenspan had it easy. Wal-Mart is the world’s largest retailer with a substantial market share in the US. (In fact, Wal-Mart’s turnover is only exceeded by a single company in the world, Royal Dutch Shell.) The Euro zone is more diverse than the US, but there are retailers with an impressive market reach like Metro, Carrefour, and Tesco that have similar capabilities of sales analysis and reporting. Their numbers would be as representative of certain national economies as Wal-Mart is in the US. I am aware that such data are strategic assets because enterprises flourish by turning these data into a competitive advantage. They wouldn’t share their insight with anybody. Still I find the idea fascinating that the success of data warehousing in the enterprise world could also result in a clearer, quicker view of a country’s general economic activity and thus support macroeconomic decision-making.

Of course, the economy is made up of more factors than consumers’ spending propensity. Luckily, there are data warehouses in numerous sectors from financial services, manufacturing, transportation – you name it. And as you do, why not name the most telling indicator from your data warehouse, too? Of all the data available, which piece of information could serve as a valid pointer of the general economic development? Expensive ready meals? LCD TV orders? Smart cars or any other durable goods? Or – no joke, sadly – soaring numbers of prescriptions for antidepressants? What would you point Jean-Claude Trichet to if he asked you?

Jonathan Tebay