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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

ECRI Insights

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

  • The Yo-Yo Years

    March 2012 | by ECRI

    The 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.

  • Mr. Greenspan's Blind Spot

    March 2011 | by ECRI

    Alan 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.

  • More Frequent Recessions

    March 2010 | by ECRI

    The 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.

  • When to Put Your Money Under Your Mattress

    October 2009 | by ECRI

    Selling (buying) 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

  • The "Subpar" Recovery: a Longstanding Misunderstanding

    January 2015 | by ECRI

    There is a near-universal consensus that the U.S. has experienced a "subpar" recovery from the Great Recession. But the pace of that revival has been fairly consistent with historical patterns. In other words, nothing more by way of growth is owed to us by the business cycle.

  • How Well Does the Yield Curve Predict Recessions? An International Comparison

    June 2011 | by ECRI

    The 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.

  • The Resurrection of Risk

    November 2001 | by ECRI

    By 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.

  • The Lead Profile And Other Non-Parametric Tools To Evaluate Survey Series As Leading Indicators

    March 1999 | by ECRI

    Because 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

ECRI History

Three generations of cycle research.

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Testimonial

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.
- ECRI Professional Member
(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.
- Fortune 100 Company
"eerily accurate"
- National Public Radio
[T]he Economic Cycle Research Institute [is] a private forecasting group with an excellent track record.
- The New York Times
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.
- Grant's Interest Rate Observer
ECRI is perhaps the only organisation to give advance warning of each of the past three recessions; just as impressive, it has never issued a false alarm.
- The Economist
           

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