Boom or bust? New index charts Haywood’s economy
Earlier this year, a series of stories in The Smoky Mountain News focusing on Haywood County’s economy explored its various economic sectors, the businesses that comprise them, the organizations that aid them and the ultimate financial impact of them.
Those stories utilized but a small sliver of the abundant data collected by governments and available to the public online for free to paint a portrait — a lifelike still life — of the current state of things.
But it’s dynamic data trends over time that yield actionable information, and although the collection and compilation of that data is now easier than ever, an understandable, impartial model that can be used by the general public to monitor the current state of the Haywood County economy did not exist. Until now.
Compared to what?
One of the unsung hallmarks of the Industrial Revolution was a more systematic approach to the collection of data; as that became more automated in the 20th and now 21st centuries thanks to the advent of computers, its usefulness in financial markets became undeniable.
Companies began to combine various related data sets from one sector — say, manufacturing employment, production, inventories and orders — into mathematical formulas that would spit out a number. On a periodic basis, that number would be recalculated, resulting in an index.
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“They’ve been used for a long time, and they’re used in regional economics quite a bit,” said Tom Tveidt, founder of Syneva Economics, a Waynesville-based consulting firm providing decision-makers in the public and private sectors economic analysis on local and regional levels.
And while the index number itself isn’t really important, how it changes over time is; when identical data is subject to identical methodology, changes in the number are relatively dependable in both direction and scope.
“Obviously things go in big trends, so just knowing what direction your economy is headed can be really valuable – not necessarily boiling down into the specifics,” Tveidt said. “So in that respect an index can give you sort of a heads up.”
Creating an index that’s accessible to the general public – most of whom aren’t trained economists – is an important consideration.
“For a more sophisticated reader hopefully the top line would grab their attention and lead them to the underlying data,” Tveidt said. “But then again, they show ‘up’ and they show ‘down’ and for some readers, that’s all they need.”
With all that in mind, The Smoky Mountain News has created the Haywood Economic Activity and Vitality Index – HEAVI, for short.
HEAVI consists of publicly available data from various reputable sources reporting measurable economic activity on a monthly or quarterly basis within a diverse geographic and economic cross-section of Haywood County.
The data is then subject to a bit of “homebrew” math that weights different sources based solely on their scale in order to produce a meaningful, stable number that will reflect both minor and major changes in the economy without overlooking or exaggerating them.
The sources for HEAVI come from three areas — major indicators, minor indicators and wages paid by sector. All three are then weighted and combined to form the HEAVI index score.
Major indicators include three components, reported monthly: county unemployment percentage, county sales/use tax collections in millions and the Town of Waynesville’s monthly building permit fees.
The index shows county unemployment steady for August at a very low 4 percent, unchanged from the previous month and down from both the previous August’s 4.6 percent, and the 12-month average of 4.3 percent; drawbacks of this metric include differing degrees of “unemployment” and that the numbers aren’t seasonally adjusted – something the 12-month average seeks to ameliorate.
Sales and use tax collections were down slightly from $3.15 million in July to $3.04 million in August, but were up from $2.89 million in August 2016 and beat the 12-month average of $2.82 million.
This metric is also highly seasonal in Haywood County, as is Waynesville’s building and sign permit fee total, which is subject to weather-related concerns but reflective of improvements, expansions and business investment in the county’s largest town.
For September, Waynesville assessed fees of $4,215, down from $5,089 in August but up $89 from the previous September. That’s well below the 12-month average of $7,065 but that average is greatly swayed when large investors like Ingles, Publix and Chik-fil-A begin new developments.
Minor indicators include five components – the monthly collections from the Haywood County Tourism Development Authority’s 1 percent funds, separated out by zip code.
These totals directly reflect both the amount of hotel rooms occupied in a given month as well as the cost of those rooms; they are ostensibly dollars coming from outside the county, and bring with them a lot of indirect spending on things like dining, shopping and sales taxes.
For the month of June — there is a significant lag in data reporting from all sources in the index — the index shows that all five jurisdictions were up over the 12-month average, except for Clyde.
Maggie Valley and Waynesville, the two biggest, were also up slightly over the previous month and the previous June, as was Canton, but both Clyde and Lake Junaluska were off the previous month and the previous year.
The final set of indicators tracks wages paid in the county by employers in three important sectors — the service industry, the manufacturing industry and the tourism industry.
Data from these sectors is reported quarterly, and lags by at least a quarter or two in reporting; the most recent report contains data from the first quarter of 2017, meaning it’s reflective of spending up to March 30.
All three sectors were up from 2016 Q1, but service and tourism were below their previous quarter, which again highlights the inherent imperfections in any index — the previous quarter was the winter holiday season, when service and tourist industries are busier than in January.
That fact alone isn’t therefore troubling, but 12-month service and tourism industry averages are both down as well.
Manufacturing, however, is up, up, up — over the previous quarter, over the previous year and over the 12-month average.
Thus the current HEAVI score for wages paid comes out to 76.45. Minor indicators this month total 86.52, and major indicators 70.72.
These scores aren’t relative to each other, but do combine to create this month’s HEAVI score of 77.90.
Running the same data, from the same sources, through the same formula shows that HEAVI is up over the previous month’s 76.90, and well up from what it was last October, 70.02.
As a general disclaimer, the scores don’t mean much on their own, so they shouldn’t be used as the sole arbiter of business or investment decisions, especially as they’re based on an armchair analysis of an admittedly arbitrary set of criteria that doesn’t nearly take all of Haywood County’s economic activity into consideration.
But as HEAVI begins to periodically appear in the pages of the Smoky Mountain News — about once a month, as data are released — do keep an eye on it, and perhaps delve deeper into the data as they pertain to your situation, or to your community as a whole.
