Elmer Smith: Read this if you know zilch about the economy

THEY NEVER tell journalism students that we may have to actually know something someday.

I was told that, if I majored in journalism, I could take "math for idiots" and "applied science" and still earn a degree in a subject with so many syllables that I would sound really smart.

I must have missed the part where it says "if the economy disintegrates or war breaks out in a nation that didn't exist last year, your job will be to explain it to everybody else."

So, I'm doing this self-taught, crash course in economics and the first thing I learn is why I hadn't done this sooner.

Studying economics is like trying to solve an algebraic equation in the original Arabic. Learning the language complicates the problem. Most economists shroud their findings in a jargon so dense, you'd forget the question before you got to the answer.

But I have gathered enough empirical evidence from watching the stock market's manic mood swings to share this fundamental dictum:

The stock market is not the economy.

You can spend weeks watching the bulls and bears flop like hooked marlins and learn little or nothing about how the economy works. The stuff that sets them off is inversely proportional to what affects the rest of us.

Our grandmothers could be eating cat food before news of our hard times reaches the trading floor. That's how I figured out this latest nosedive was so ominous.

The Dow Jones plummeted to new depths this week on the news that we weren't buying much. We weren't buying cars and houses because the banks won't give us credit. We're wearing our old clothes till you can see our skin through them because a lot of us have found that we can't eat well and dress well at the same time.

This was a big blow because retail spending now accounts for two-thirds of the economy. Take a minute to process that. It means that 67 cents of each dollar spent in America right now is spent by us and not by the megacorps they keep track of on the big board.

This is why the president and Congress squeezed out that $92 billion economic-stimulus package for us last spring and told us to go buy something right away.

But if we are the ones propping up the economy, how come they gave more than $750 billion so far to the banks and mortgage companies?

It's because the economists are tracking the wrong index of leading economic indicators.

A quick primer for those of you who don't have your broker's number on speed dial. The leading economic indicators include the Consumer Price Index (CPI), the Producers Price Index (PPI) the Gross Domestic Product (GDP) and so on (etc.)

What it doesn't include is a set of easy-to-follow rules that Joe Sixpack can decipher between libations.

My loyal readers will be pleased to learn that I have come up with a set of indices so simple that even an economist can understand them.

They are, in order of importance:

* The Tale of the Tape Index (TTI), a figure arrived at by dividing the length of our supermarket cash-register tapes by the width of their bottom lines.

* The Payday Proceeds Gap (PPG), a measurement of the distance not covered by stretching your paycheck from week to week.

* The Sticker Shock Countdown

(SSC), the number of minutes it takes to regain full consciousness after pricing automobiles, appliances or furniture.

* The Brown Bag Quotient (BBQ) a figure arrived at by dividing your annual lunch money allotment by the number of days you have to bring a sandwich from home.

* The Dusty Eye Quotient (DEQ), which is the circumference of the dust cloud that rises when you blow your breath into your billfold.

Tracking these will give you a much clearer picture of our economy than that stuff they teach economists.

And you thought a journalism degree was worthless. *

Send e-mail to smithel@phillynews.com or call 215-854-2512. For recent columns: http://go.philly.com/smith