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 uses a highly nuanced “many-cycles” view to understand the complex dynamics of the global economy.
To monitor the U.S. economy alone, we use an array of more than a dozen specialized leading indexes in the context of the ECRI framework for incorporating various sectors and aspects of the economy.
The ECRI framework covers 21 economies, incorporating well over 100 proprietary indexes designed to be comparable across borders.

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Australian Policymakers' Confidence May Be Misguided

ECRI has just updated its Australian Long Leading Index (AULLI). The value of this index lies in its ability to anticipate cyclical turns in the economy before conventional leading indexes.

Australia recently celebrated its 21^st consecutive year of economic expansion, and the country’s low interest, inflation and unemployment rates have its policymakers content, with Treasurer Wayne Swan calling the country’s economic fundamentals “the envy of the developed world.” However, consumer and business confidence surveys show growing pessimism over concerns of falling home prices, a downturn in commodity prices, and a slowdown in China.

ECRI’s latest update to the AULLI provides insight into whether Australia’s outlook is as bright as the policymakers think, or if doubts are warranted.

Full Report: July 26, 2012: International Cyclical Outlook

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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.

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Australian Policymakers' Confidence May Be Misguided

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