Coupons.com has learned a lot in its ten years: How to survive a dot-com bubble. How to thrive in a recession. And lately, how to turn itself into a surprisingly good economic indicator.

By Paul Sloan, senior writer
June 17, 2008: 9:33 AM EDT

Coupons.com CEO Steven Boal is a data-junkie.

(Fortune Magazine) — There’s a reason Steven Boal is fielding calls from hedge fund managers asking what he sees going on in the U.S. economy. As CEO of Coupons Inc., a small web company that is by far the largest provider of downloadable coupons, Boal has an unusual window into just how U.S. consumers are feeling. His data show that his customers - coupon clickers, if you will - are more active than ever, and that means trouble.

The online coupon business is still small, roughly 2% of the $6.6 billion coupon industry overall, but the shift from paper to the web is picking up speed, and privately held Coupons Inc., with annual revenues estimated at $55 million, is growing at a rate of 35% each quarter.

What they discovered was that a certain kind of coupon turns out to be a good leading indicator of American consumer sentiment. Specifically, Boal pays attention to what he calls mid-quality coupons, which are coupons of well-known brands with, say, 20% to 30% off. Then he tracks the percentage of coupons that people print after viewing them the first time. That in turn is measured against the redemption rate. It’s all boiled down to averages and measured against historical norms, and the result is the chart that you see on this page. The trend line spiked last September, crossing a mark that, based on the index’s past behavior, Boal considers meaningful - an early sign that consumers are watching their pennies more closely. The higher the indicator, the greater the economic pain out there.

For now Boal is using his data only internally, as a way to track the market. So what are the data saying now? “We’re moving above anything we’ve seen before,” he says. The line just keeps going up and shows no sign of stopping. Good news for Boal, bad news for everyone else.