The Leading Predictor of Recessions and Recoveries
We are students of the business cycle - the most powerful force in market-oriented economies.
We are not “economists.”
Unlike mainstream economists, who base their forecasts on econometric models, we have developed a robust leading indicator approach which is unrivaled in accurately calling turning points in economic growth and inflation worldwide.
Our track record of making turning point calls is unrivaled.
Our research, spanning three generations, has uncovered reliable sequences of events that occur around turning points in economic growth, inflation, and employment. By using this knowledge, we regularly pinpoint when the cycle will turn, even when some believe “this time it's different.”
Legendary investor Sir John Templeton said that the four most expensive words in the English language are: “this time it's different.” ECRI's research is focused on stable cyclical patterns that have prevailed for more than a century, including both the “Great Moderation” and the Great Recession.
A Trusted Advisor
Our ability to call the economy's turning points has made ECRI a trusted advisor of Fortune 500 companies, major asset managers, and government agencies on all six continents.
We help our members manage cyclical risk - in effect, boosting their risk-adjusted returns.
Cyclical risk rises and falls over the course of the business cycle. We alert our members to directional shifts in the cycle so they can better time critical decisions - whether they involve asset management, hiring, production and pricing, or monetary policy.
Forewarned is forearmed: members avoid being blindsided by cycle turns.
For example, in April 2009, when global headlines warned about a “coming depression,” ECRI accurately predicted the U.S. recession would end by summer. We were right and gave our members the clarity and conviction needed to go against the crowd when virtually everyone was looking the other way; to their ultimate detriment and our members' ultimate gain.
A Tradition of Public Service
In the 1960s, ECRI's co-founder, Geoffrey H. Moore, whom The Wall Street Journal called “the father of leading indicators,” gave his original Index of Leading Economic Indicators (LEI) to the U.S. government. The state-of-art successor to the LEI is ECRI's Weekly Leading Index (WLI).
Before there was a committee to determine U.S. business cycle dates, Moore decided all those dates on the NBER's behalf from 1949 to 1978, and then served as the committee's senior member until he passed away in 2000. Using the same approach, ECRI has long determined recession start and end dates for 20 other countries that are widely accepted by academics and major central banks as the definitive international business cycle chronologies. These chronologies have always been publicly available.
Our Track Record
Highlights of ECRI's calls.
For ourselves, in this cycle, we'll line up with ECRI.
I have to pay attention to those people and indicators that have pointed in the right direction – even when they've gone against the crowd (and my opinion at the time). One such outfit is the Economic Cycle Research Institute, whose various leading indicators actually have done just that – lead where things were headed.
(ECRI’s) forecast of the [Great] recession helped us anticipate reduced merchandise sales; we proactively revised our inventory forecasts down months ago, and that has helped to greatly minimize the inventory swell and need for markdowns.
In March , the month the market scraped bottom, ECRI went forth with [a] tablepounding historical observation… The implication could not have been clearer that a market rally, when it started, would be no sucker's affair but the real McCoy.
Nothing in the world compares with ECRI’s insights into the business cycle. Those insights form a key part of our strategic and tactical management of asset class allocations. We have never been disappointed in following what ECRI’s indicators suggest is likely to occur next.
As an investment strategist, I need to navigate the many twists and turns in the emerging economic landscape with as much foresight as possible to know when to take or avoid risk. In this quest, ECRI’s array of leading indices, specifically designed to predict and navigate economic turning points, have been an indispensible tool.
The clarity and conviction to break from the crowd at the right time.