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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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Jan 26 2012

Cyclical Risk Patterns & Equity Prices

Nearly a year after the end of the Great Recession, we concluded that we were "approaching the most dangerous period of the business cycle to employ a buy-on-dips strategy." That turned out to be a prescient forecast that was followed by widespread stock market worries about a "double-dip recession."

This conclusion drew on an analysis covering six decades that pinpointed the stages of the business cycle at which equities run the greatest risk of corrections. Given the current market rally, we repeat the analysis to assess the risk of market corrections, and their likely magnitude at this stage of the business cycle.

Related News & Events

Forecasting Fog

New York Times December 18, 2011

The American economy certainly isn’t at peak strength. With unemployment at a painfully high 8.6 percent, it can’t be. More

 

Recession Update

Bloomberg December 8, 2011

ECRI's Lakshman Achuthan discusses ECRI's recessionary outlook, Gross Domestic Income, and how economic growth doesn't really "muddle along" at sustained low rates. More