A hamburger and a coffee shop discuss the economy's value

Beyond traditional metrics like GDP and inflation, two unconventional indicators offer insights into an economy's health: the price of a Big Mac and the presence of Starbucks coffee shops. These informal measures, used by global brands, capture real-world purchasing power and urban dynamism that official statistics may lag in reflecting.

The Big Mac Index, launched by The Economist in 1986, uses the standardized burger's price across countries to assess currency overvaluation or undervaluation against the dollar. For instance, in January 2025, Argentina had the most expensive Big Mac regionally, suggesting an overvalued currency. Brazil and Mexico's prices were around $4, aligning with global averages.

Applying this methodology to Paraguay, a Big Mac costs G. 28,000 while in New York it's $5.79. This implies a dollar value of G. 4,836 for parity. However, the current exchange rate is G. 6,200, indicating the Paraguayan guaraní is 22% undervalued based on purchasing power parity. This is an improvement from two years ago when the dollar exceeded G. 7,300, making Paraguay appear cheaper to foreign investors.

Similarly, the opening of a Starbucks in a U.S. neighborhood is often seen as a signal of gentrification and rising property values. Both indicators, though informal, provide a tangible snapshot of economic conditions, revealing information that official exchange rates might not fully capture.