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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.

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Jobs Report and 2018 Slowdown


Reuters interview discussing the December employment report and the likelihood of a “surprise” U.S. economic growth slowdown this year. (see link below to watch on Reuters TV)

- Coming off a strong 2017, most everyone is bullish on markets and U.S. economic growth in 2018, but ECRI’s analysis points to slower growth ahead.

The chart shows year-over-year GDP growth since 2010.



It is easy to see the decelerations in growth that happened in 2010-11, 2012-13 and 2015-16.

You can also see the acceleration in growth, as forecast by our leading indexes, in 2016-17 that has many people banking on the momentum carrying into this year.

But ECRI’s leading indexes are telling us that there’s going to be a break in that momentum, meaning the 4th slowdown since 2010.

Of course, interest rates have been low since the recession, accompanied by intermittent injections of vast amounts of liquidity, perhaps mitigating equity market reaction to recent slowdowns.

Today, rates are rising and we have quantitative tightening taking place on the cusp of an economic slowdown.

- ECRI has long understood that cycles, acceleration and deceleration in economic growth, are part and parcel of how market economies behave, and it’s the turning point between acceleration and deceleration where people are caught off guard.

Our research group has long understood that cycles -- accelerations and decelerations in growth -- are part and parcel of how market economies behave.

It’s precisely at the cyclical inflection point, the turning point between acceleration and deceleration, that the consensus is always caught off guard.

We believe that economic growth and inflation are inherently cyclical. Click here to review our track record, including ECRI client report excerpts.

For more information on ECRI professional services please contact us.

VIEW THIS ARTICLE ON REUTERS

Related News & Events

Tell-Tale Spreads Confirm Slowdown Ahead

Bloomberg December 13, 2017

The bond market, like ECRI's leading indexes, sees an impending slowdown. More

 

Tax Cuts May Hit Economy as it Slows

Investors Business Daily December 7, 2017

ECRI's forward-looking indicators point to "a slowdown that most don't see coming." More

 

Inflation Cycle Locked Into Downturn

ECRI November 15, 2017

ECRI was warning of the inflation downturn when the Fed was celebrating its midyear “Mission Accomplished” moment. More