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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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Consensus Plays Catch Up to Our Global Growth Call


A full year ago – when the IMF slashed its global growth forecasts – ECRI forecast “a cyclical upturn in global growth” (International Cyclical Outlook, October 2016). This was based on concerted upswings in the growth rates of ECRI’s international long leading indexes. In particular, we noted that “growth in the majority of our long leading indexes for the Group of Seven (G7) economies has now climbed above year-ago readings.”



Fast-forward to February, and the popular refrain was “that the ‘hard data’ [were] not confirming the … strength in the ‘soft data.’” Amidst that confusion we flagged the “Brightest Global Growth Outlook Since 2010,” because growth in ECRI’s 20-Country Long Leading Index was at an 80-month high (International Cyclical Outlook, February 2017).



Today, the consensus has finally caught up, and optimism abounds about the future of global growth, based on coincident data like GDP that – by definition – cannot predict the future. On cue, having belatedly recognized the current reality, the IMF has just upgraded its growth forecasts for most economies.

Of course, the real question is whether the IMF, along with the consensus, will once again be blindsided by a turn in the economic cycle. At ECRI, we continue to keep a close eye on our long leading indexes for the answer.

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