View: Quirky Trouble Signs: Office Chairs, Caustic Soda - Businessweek

Two of the quirkier indicators of where the economy is headed are pointing downward. Office furniture leasing seems to be cooling off. And orders for industrial chemicals are slowing. Those may seem like trivial items to focus on, but many economists regard them as good barometers of the outlook for the economy as a whole.

As recently as February, Warren Buffett was optimistically pointing to his furniture-leasing business as “reflecting the steady recovery we have seen in almost all of our non-housing businesses.” But today, Bloomberg News reports that the company is saying demand is “simmering compared to where it was at the beginning of the year, when it looked like the recovery, at least from our perspective, would have been pretty robust.” That’s according to Jeff Pederson, the new chief executive of CORT Business Services, a unit of Buffett’s Berkshire Hathaway.

CORT is the world’s largest provider of rental furniture. “It’s not flat-lining, by any stretch of the imagination, but it has slowed down,” says Pederson.

Meanwhile, Bloomberg News’ Chart of the Day on June 26 featured a flat-lining Chemical Activity Barometer. That’s a measure of demand for obscure but important chemicals such as caustic soda (used in paper production), polyvinyl chloride (for plastics), and titanium dioxide (a component of paint). The barometer usually rises and falls with the Federal Reserve’s industrial production index, but lately it hasn’t been keeping up with the Fed measure. That’s a sign of possible trouble ahead. “We’re early in the supply chain,” says Kevin Swift, chief economist of the American Chemistry Council, which prepares the barometer.