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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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Jun 29 2015

Assessing Major Economies’ Resilience to Shocks

Concerns about a looming economic catastrophe triggered by Greece or a Fed rate hike are increasingly being voiced by a veritable who’s who of luminaries. This is based on the mainstream belief that recessions are caused entirely by shocks. But as we explained in detail earlier this year, our approach to recession forecasting is quite different. Based on decades of research, we have come to understand that “endogenous cyclical forces periodically open up windows of vulnerability” and “once the economy enters such a state of cyclical vulnerability, an exogenous shock can easily tip it into recession.”
 
Since ECRI’s long leading indexes are able to detect such windows of vulnerability, we examined the recent cyclical behavior of our long leading indexes for the U.S. and other major developed economies, providing clear insights about their current resilience to exogenous shocks.

Related News & Events

Shifting Patterns in Recessions and Recoveries

ECRI June 17, 2015

Slides and notes from Madrid Fund Forum Conference. More

 

Simple Math: ½% + ½% = 1%

ECRI June 11, 2015

With productivity growth and potential labor force growth both averaging ½% a year, trend real GDP growth is converging to 1% a year. More