Dry Cleaning Costs Rise With Cost Of Imported Wire Hangers

A new economic index model devised by a Rutgers Business School professor - based on the business dry cleaners do - predicts that New Jersey is making an economic recovery

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New Jersey is making an economic recovery. Just ask your neighborhood dry cleaner.

That’s what a team at Rutgers Business School did, using a novel economic index: the Dry Cleaning Index, or DCI.

Farrokh Langdana, a professor of finance and economics at the Rutgers Business School, came up with the index of starched shirts, suits and blouses based on a statistic behind unemployment numbers: the people over age 16 who are unemployed but who are not seeking work.

Unemployment numbers are based solely on the number of people seeking work. This means that official unemployment figures can be misleading if big numbers of people are discouraged from continuing to try to find work.

According to the DCI model, the business reported by dry cleaners would indicate whether more people are looking for work by cleaning their best clothes to go to job interviews and present their best image.

A DCI of 50 is the cutoff: lower than that indicates an economic slowdown, while a DCI higher than 50 indicates an increase in the volume of shirts, suits and blouses – and therefore, an optimistic economic outlook, the theory goes.

The DCI is currently 62.5, based on Rutgers business students’ surveys of their dry cleaners’ business. That means New Jersey is undergoing a macroeconomic recovery, according to the Rutgers theory.

"The index provides information that was not previously available, and it captures, to some extent, the mobility of workers back into the work force to look for work," said Langdana.

“It’s a little outside the box, but from an economic indicator point of view, it provides an interesting perspective in New Jersey,” said Dan Stoll, a Rutgers Business School spokesman.

The index is released for their first time this month will be released every six months thereafter, Stoll said.

Seth Augenstein can be reached at saugenstein@njadvancemedia.com. Follow him on Twitter @SethAugenstein. Find NJ.com on Facebook.