Contact

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.

News

 

Becoming Japan: Update


The European Central Bank cut rates last month following a "surprise" drop in Harmonized CPI inflation to 0.7% in October. But a head-to-head comparison on the same metric (see chart) shows that U.S. inflation was actually lower, having dropped to just 0.6% in October.

What many still fail to acknowledge is that the major Western economies – including the U.S. – are effectively becoming Japan: the comfortable consensus is that, in contrast to the Eurozone, inflation in the U.S. should be (to quote the Fed) “moving back toward its longer-run objective” of 2%, and thus not a concern.

But should it be a concern, with yoy growth in the Personal Consumption Expenditures deflator falling to a four-year low of 0.7%, increasingly distant from the Fed’s 2% target, precisely as ECRI had predicted?

Related News & Events

Becoming Japan (Part 2)

ECRI November 4, 2013

Inflation has already turned lower in the U.S. and the Eurozone than in Japan. More

 

Becoming Japan (Part 1)

ECRI July 30, 2013

Japan’s lost decades showed faster GDP growth than in the U.S. and other major economies in the last five years. More