ECRI Insights
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Over three generations of business cycle research, we have helped to advance the understanding of business cycle dynamics, some of which we have shared publicly.
The excerpts and papers collected here reflect a sampling of important concepts pioneered by our research group.
Ideas
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The Yo-Yo Years
March 2012 | by ECRIThe convergence of two cyclical patterns virtually dictates an era of more frequent recessions in developed economies. As a result, and because of the Bullwhip Effect, growth in developing economies is going to be jerked around more than people think, making for a good deal of cyclical economic contagion. In other words, we are now in the yo-yo years.
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Mr. Greenspan's Blind Spot
March 2011 | by ECRIAlan Greenspan accepts ECRI's long-held criticism that the Fed is chronically behind the curve because of its reliance on core inflation and the output gap. But he is wrong that no indicator can predict when inflation is about to take hold.
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More Frequent Recessions
March 2010 | by ECRIThe convergence of lower trend growth and higher cyclical volatility will lead to more frequent recessions, keeping the jobless rate cycling around high levels and spelling the death of buy-and-hold strategies for stocks.
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When to Put Your Money Under Your Mattress
October 2009 | by ECRIBuying (selling) stocks before recessions (recoveries) based on ECRI's real-time calls would have doubled the returns from a buy-and-hold strategy, beating the S&P by more than eight percentage points a year over the past decade.
Papers
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How Well Does the Yield Curve Predict Recessions? An International Comparison
June 2011 | by ECRIThe yield spread's popularity is due to its "success" in predicting U.S. recessions. Based on ECRI's international recession dates, we find it to be an unreliable predictor of international recessions - especially with rates at zero.
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The Resurrection of Risk
November 2001 | by ECRIBy the turn of the century, many were proclaiming the death of the business cycle. But risk has returned. Because technology and globalization can both reduce and increase risk, both economies and markets will stay volatile.
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The Lead Profile And Other Non-Parametric Tools To Evaluate Survey Series As Leading Indicators
March 1999 | by ECRIBecause leading indexes are intended only to forecast the timing of cycle turning points, they should not be evaluated on the basis of standard parametric statistics like R-squares. We suggest an alternative, nonparametric approach.
ECRI History
Testimonial
ECRI has had a very stellar record. They've been making pretty bold calls and going against the conventional wisdom. So far their record has been one of the most impressive, and has been written up in the press as well as talked about in policy circles.
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.
In March [2009], 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.
Inflation Ahoy! We're indebted to the ECRI, that unnapping watchdog of inflation, for the FIG data.
Over the last 15 years, [ECRI] has gotten all of its recession calls right, while issuing no false alarms.
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.
