our track record

April 2009

ECRI Outlook

(T)he timing of the USLLI upturn, along with a nascent upturn in the WLI, suggests that the current recession will end in the second half of the year, probably by this summer...

(Yet, as) A. C. Pigou (wrote) in 1920, "The error of optimism dies in the crisis but in dying it 'gives birth to an error of pessimism. This new error is born, not an infant, but a giant.’"... Following the latest crisis, the "giant error of pessimism" is now rampant. This is why today many are skeptical that we have the first clear signs that the recession will end in the coming months.
Read April 2009 ECRI Outlook full text.

Consensus Outlook

"There’s no reason to think that this recession is going to end any time this spring or this summer," Ken Goldstein, an economist at the New York-based Conference Board, said.

—Conference Board, April 20, 2009

August 2008

ECRI Outlook

On the Cusp of the Worst Global Recession in Nearly Three Decades: It has been a long time since the global economy was faced with such concerted contractions… In fact, this may be the most concerted global recession since the oil shocks of the mid-1970s and early 1980s. Even worse, according to the long leading indexes, there is no light yet at the end of the tunnel… It is widely believed that the U.S. economy, which entered recession before Europe did, will also pull out of recession first. Unfortunately, there is no sign that this hoped-for upturn is anywhere in sight… (B)y mid-August, growth in the Weekly Leading Index had plunged to a 28-year low. In sum, we are on the cusp of the worst global recession in nearly three decades, with no end in sight.
Read August 2008 ECRI Outlook full text.

November-December 2007

ECRI Outlook

Recession Risks: (T)he magnitude of the latest interest rate shock and oil shock puts them in recessionary territory - in the past, such shocks have triggered economic contractions... The growing weakness in the growth rates of ECRI's leading indexes is a warning that recessionary weakness could develop. One key danger is a sustained credit crunch, because the credit crisis is clearly not over... (G)rowth in the Weekly Leading Index (is) now approaching its worst reading since the 2001 recession... Also, the breadth of deterioration evident in the latest data on the components of ECRI's many leading indexes has rarely been seen except near the cusp of a recession.
Read November-December 2007 ECRI Outlook full text.

Consensus Outlook

"U.S  Housing Driven Recession Unlikely"

"We disagree with the high estimates of U.S. recession probabilities. Both data and fundamentals point to a softer-than-recession landing, in our view. We're maintaining our 20% estimate of the U.S. recession probability for the first half of 2008. We lowered it from 35% on September 19 after the Fed's 50-basis-point cut.

—Bear, Stearns & Co. Inc., Dec. 2007

"In its fourth quarterly report of 2007, the UCLA Anderson Forecast holds steadfast to the basic tenet of a forecast they have been making throughout the year, that the national economy is not technically in a recession, nor is there a national recession on the economic horizon."

—Business Wire, Dec. 2007

November 2006

ECRI Outlook

Global Growth has Begun to Slow, but a U.S. Recession Looks Less Likely: (W)ith the U.S. economy slowing and inflation pressures easing, there may be less pressure on the Fed to engineer further rate hikes... (But) to many observers, the clearly inverted yield curve implies that the Fed is more likely to cut rates in the next couple of quarters to avert a possible recession. It is in this context that the reduction in recession risk signaled by ECRI's leading indexes raises an interesting issue. The question is, if it becomes clear to the Fed that a recession is improbable, how likely are rate cuts next year?
Read November 2006 ECRI Outlook full text.

Consensus Outlook (seven months later)

The rate cut calls are dropping like flies in the offices of Wall Street's economists as they have on Treasury bond trading floors and futures trading pits.

"Mmhh, crow," writes Jan Hatzius, economist at Goldman Sachs. It's the surprising strength of the labor market amid three quarters of below-trend growth that the economist says he "missed." Goldman pulled the plug on its forecast of Fed easing in 2007 and increased its estimates for second and third quarter GDP to 3% from 2% and to 2.5% from 2%, respectively.

Merrill Lynch's perma-bear, David Rosenberg, wrote Monday that he now believes the Fed will not cut rates anytime this year.

—Liz Rappaport, RealMoney.com, June 5, 2007

April 2006

ECRI Outlook

The End of the Housing Boom: At least as far as new homes are concerned, the housing boom appears to be over... (E)xisting home prices peaked in October, a month after new home prices did, but have shown a much more modest dip than new home prices thus far... ECRI's U.S. Leading Home Price Index, designed to anticipate turning points in home prices, has been clearly predicting a downturn in home price growth, which has already occurred... Even cyclical declines in existing home price growth, already a fait accompli, have historically been followed by cyclical downswings in consumer spending growth... An actual downturn in the home price level would... result in a significant consumer spending slowdown, especially if accompanied by rising oil prices.
Read April 2006 ECRI Outlook full text.

Consensus Outlook

"Home sales unexpectedly rose and U.S. consumer confidence reached a four-year high, allaying concerns about a collapse in housing and pointing to sustained economic growth."

—Bloomberg News, Apr. 2006

"If one were looking for additional weakness in the economy, it's not going to come from housing," said xxx xxx, deputy chief economist at xxx xxx in New York. "We are seeing the economy generate a fair amount of momentum."

"A Standard & Poor's index of 16 homebuilders, including D.R. Horton Inc. and Pulte Homes Inc., rose 3.4 percent today."

—Bloomberg News, Apr. 2006

October 2005

ECRI Outlook

Rays of Hope May Cause Overheating: (U)nderlying inflation pressures are rising in both the U.K. and the Eurozone, including Germany in particular... Given the concerted cyclical upturns in inflation pressures in most major economies, the most pressing near-term issue is likely to be inflation, not recession.
Read October 2005 ECRI Outlook full text.

Consensus Outlook

"The U.S. Treasury market may be signaling that Federal Reserve interest-rate increases will send the economy into recession, the Wall Street Journal said, citing investors and analysts."

"The Fed's policy of raising short-term borrowing costs has caused a narrowing in the gap on yields between two-year and 10- year Treasury notes, known as the flattening of the yield curve,the newspaper said. The past five times that two-year note yields rose above those on 10-year Treasuries, a recession followed, the Journal said, citing xxx xxx, an economist at xxx xxx."

—Bloomberg News & the Wall Street Journal, Nov. 2005

September 2005

ECRI Outlook

A Shock-Resistant Economy: Because ECRI's leading indexes of economic growth have now been in clear cyclical upswings for many months, it was obvious that the economy was fairly impervious to shocks. That is why it was able to keep growing steadily even as oil prices and interest rates climbed this year, and why it has been able to withstand the devastation of Hurricane Katrina... In sum, the drivers of the U.S. business cycle are still configured in a way that makes it difficult for Katrina or other near-term shocks to trigger a new recession.
Read September 2005 ECRI Outlook full text.

Consensus Outlook

"While the economic damage assessment is still underway, it is already clear that the impact from Hurricanes Katrina and Rita will be the biggest among natural disasters in recent U.S. history; economic growth could slow down enough to make it feel like a recession, even if one does not occur technically."

—The Conference Board, Oct. 2005

March 2005

ECRI Outlook

Although not imminent, a firming in economic growth is already in sight. For most of the economy, including manufacturing and non-financial services, a cyclical upturn in growth is not imminent. However, as suggested by the (U.S. Long Leading Index) and the (Weekly Leading Index), which have longer lead times, a firming in overall economic growth is already on the horizon.
Read March 2005 ECRI Outlook full text.

Consensus Outlook

"We are forecasting slower growth in 2005 for three reasons. First, our model for forecasting GDP tells us that the 2004 increases in both oil and fed funds will slow growth in 2005. Second, the yield curve's significant flattening suggests slower growth. And third, on balance, the economy seems to be slowing, e.g., real GDP, employment and the svc PMI."

—Major Wall Street forecasting firm, Feb. 2005

May 2004

ECRI Outlook

Broad Moderation in US Growth Likely. We are now on the cusp of a transition from (the) acceleration phase of the economic recovery to the deceleration phase, during which the economy's rate of growth will ease while remaining healthy for the time being... In sum, the economy is likely to see a broad moderation in economic growth and employment in the coming months. However, it is unlikely to be tipped over into recession, except by the most massive of shocks.
Read May 2004 ECRI Outlook full text.

Consensus Outlook

"U.S.: The Economy Is Showing Real Muscle"

"Resilient consumer spending, faster inventory rebuilding, and better export growth all contributed to first–quarter growth. And that mix will provide the momentum needed to power the economy into the second half."

—BusinessWeek, May 2004

August 2003

ECRI Outlook

A Japanese recovery is finally at hand. The Japanese economy is emerging from its longest recession on record... (T)he pattern of movements of ECRI's Japanese leading and coincident indexes, as well as their components, are in line with the experience in earlier business cycle recoveries.
Read August 2003 ECRI Outlook full text.

Consensus Outlook

"Japanese Business Sentiment Falls Amid Recovery Doubts"

"Japanese business sentiment worsened over the past quarter, as anxiety over the war in Iraq weighed on companies already concerned about Japan's weak economy."

—The Wall Street Journal, April 2003

June 2003

ECRI Outlook

A consumer-led jobless recovery is set to persist, even as manufacturing jobs disappear. The normal cyclical pattern of employment in the current business cycle has been distorted by a rapid structural shift in manufacturing. That is why there is so much confusion (in some quarters) about the end of the recession... As growth picks up in the second half of the year, it may boost job growth in services.
Read June 2003 ECRI Outlook full text.

Consensus Outlook

"Manufacturing Continues To Confound Economists"

"The manufacturing sector continues to confound economists, policy makers and manufacturers themselves. Recent economic reports suggest orders for factory goods are starting to pick up."

—The Wall Street Journal, May 2003

March 2001

ECRI Outlook

Recession no Longer Avoidable. The cyclical leading indicators monitored by ECRI are now collectively pointing to a business cycle recession in the U.S. economy, making it very unlikely that the economy will avoid a recession this year.
Read March 2001 ECRI Outlook full text.

Consensus Outlook

"U.S.: Adjusting to Slower Growth Needn't Be Traumatic"

"Business–and the Fed–are reacting more quickly to changes"

"So far, the latest readings are encouraging, especially those from the household sector. In January, retail sales bounced back from their poor December showing, as car sales rebounded strongly. Falling mortgage rates have unleashed a barrage of refinancings that will put extra cash in people's pockets. And January job growth looked better. The ability and willingness of consumers to keep spending, even if at a slower rate, is the key to avoiding the train-wreck scenario... (T)he Fed's growth projection implies a significant pickup in the second half."

(Any worries) are mitigated by the consumer turnaround in January. Retail sales rose a strong 0.7% from December. Excluding the rebound in car buying, sales posted a broad 0.8% gain. The numbers suggest that any inventory problem that retailers faced at the beginning of the year has been quickly pared to a much smaller problem in only one month. More important, they imply that consumers are not retrenching in a way that could push the economy into a recession.

—BusinessWeek, Feb. 2001

September 2000

ECRI Outlook

The USFIG (Future Inflation Gauge) ... (is) suggesting a clear decline in underlying inflationary pressures. The USFIG has now declined for four straight months from April's 11-year high, suggesting a clear decline in underlying inflation pressures. While a moderation in U.S. growth is a contributing factor, the key to a more beningn inflation outlook is an imminent global industrial slowdown.
Read September 2000 ECRI Outlook full text.

Consensus Outlook

"(T)he risks continue to be weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future."

—Federal Open Market Committee, Nov. 15, 2000

September 2000

ECRI Outlook

Never in this expansion have the leading indicators been so close to forecasting a recession. In July, the U.S. Leading Diffusion Index (USLDI) plunged to its lowest level in the current expansion... in eight out of the ten instances since 1950 in which the USLDI dipped this low, a recession followed.
Read September 2000 ECRI Outlook full text.

Consensus Outlook

"Economic Focus: Recession Is Distant"

Sure, economic growth is slowing, but a recession? Forget about it, according to an index assembled by Economy.com, a forecasting firm.

—The Wall Street Journal, Sept. 2000

"U.S. Economic Data Continue To Indicate a Soft Landing"

—The Wall Street Journal, Sept. 2000

"For the past record-setting 37 quarters, the tech sector has defied gravity, becoming the most powerful force in the longest and strongest economic boom in postwar history. Surely, says conventional thinking, this can't go on much longer. So does the news out of Intel, a presager of past tech stumbles, signal a widespread downturn? The short answer: no. Dozens of analysts, economists, industry CEOs, and technology buyers say a general tech-industry meltdown is highly unlikely."

—BusinessWeek, October 2000

March 2000

ECRI Outlook

Eurozone Growth Will Ease Later This Year. (The) Eurozone Long Range Gauge clearly points to an easing of growth later this year in that region, in contrast with the continued improvement seen in the survey data.
Read March 2000 ECRI Outlook full text.

Consensus Outlook

"For the year as a whole, euro area GDP growth is projected at 3 1/2 percent, with all countries registering above–potential growth rates… Over the coming year, differences in growth rates are projected to decline as the recovery in Italy and Germany catches up with that in France and some of the cyclically advanced countries."

—World Economic Outlook, IMF, October 2000

June 1999

ECRI Outlook

Japanese recovery spells major shift in mix of factors that fostered "Goldilocks economy." A key ingredient of the not-too-hot, not-too-cold Goldilocks economy has been imported deflation... A Japanese recovery will alter one of the key conditions that has allowed the U.S. to enjoy years of non-inflationary growth.
Read June 1999 ECRI Outlook full text.

Consensus Outlook

"The economic picture is also brighter than many would have expected a few months ago. Of course, the U.S. economy continues to expand at a healthy, noninflationary pace. And ..., real money supply…is growing at its fastest pace since early 1987."

—BusinessWeek, May 1999