The Weekly Quill — The Indicator
“I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant.”
Alan Greenspan
If enigmagnetism was a word, he would have owned it. In the end, he crafted a cottage industry around his aura. Every time the Federal Open Market Committee convened in the Eccles Building, cameras swarmed him as the paparazzi did Princess Diana. CNBC’s Mark Haines would chuckle, as only he could, as sidekicks Joe Kernan and David Faber delivered a play-by-play, sportscaster-style…on a briefcase. Was it stuffed with papers pushing out of the seams? A rate hike could be imminent. Was it svelte? No change to monetary policy was imminent. No one enjoyed the distraction as much as the star himself, Federal Reserve chairman Alan Greenspan. “The Maestro” so coveted the limelight, he purposefully employed obfuscation to heighten the mystique. In a 60 Minutes interview conducted shortly after retiring from his post, Greenspan admitted that he injected complexity into his public remarks.
There is always an irony. In the case of Greenspan, it was the simplicity with which he approached the dismal science. The direction of the economy could be seen through the singular prism of cardboard prices. If people were buying more things because they had greater means with which to do so, demand for cardboard would rise as purveyors of stuff needed more boxes to ship their stuff to stores. In an economy that’s 70% consumption, it really is that easy. If anything, the indicator has never been more prescient.
On July 16, 1995, Amazon.com opened its virtual doors for business. Within a month, it had shipped books to all 50 states. Two years later, the bookseller went public raising $54 million, with an ‘m.’ It wasn’t until 1998 that Amazon branched out beyond books, to music CDs. The next year, the expansion went the next step to toys, electronics, and tools. Jeff Bezos’ strategy of “get big fast” meant the mammoth firm would not turn a full-year profit until 2003. In hindsight, it’s impossible to dispute Bezos’ genius. In 2000, just as Amazon was spreading into other realms of merchandise, e-commerce sales as a percentage of U.S. Retail Sales was 0.9%. By 2019, the share had grown to 11.1%. And then the pandemic hit. At the end of 2022’s third quarter, online sales commanded 14.8% of the pie. While economists predict that the 20% milestone will be crossed by 2025, it’s clear that a pause in the trend will come first.
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Danielle DiMartino Booth is founder and Chief Strategist at Quill Intelligence