Big Money Questions: Don't wait for the economists to tell you what's happening next

Is the size of a chocolate bar as good an economic indicator as a graph or model?

Former advisor to the US President and economic analyst Pippa Malmgren thinks so. While modelling and forecasting has its place, it is inherently backward looking: it relies on data from the past to predict the future. However, there are everyday signals all around us that give us clues about what's going on now.

The trick, she says, is to just look around you. For example, if you notice that your rent's going up, your annual railcard costs another £200 and the amount of cereal you get in a box is shrinking, that can tell you things about inflation ahead of the official data.

Speaking to me on the Big Money Questions show, Pippa says, ‘There is no need to rely on the words of an expert. Instead I ask that you open your eyes and ask yourself what you see. You can and should observe for yourself the signals the world economy is sending.

‘Then you can make your own decisions and choose what to do about such signals based on your own ability, risk taking and skill.’ Economists and experts can give us invaluable information about the state of the economy, and use this to make important decisions.

But we can’t just leave it to the experts – we need to get involved in the conversation.

Pippa adds: ‘Everyone can have a grip and get involved in the conversation instead of leaving it to a few policymakers who are off in some back room somewhere making decisions on our behalf that will affect us.’

After all, they don’t always get it right. The good news is you don’t need an economics PhD to do it. Just look for the signals that you see around you.