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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Apr 28 2014

Complacency vs. Cassandra

Last year ended with soaring hopes, as 10-year U.S. Treasury yields surged above 3% to a two-and-a-half-year high, buoyed by a near-unanimous view that they would climb even further this year. Yet, nearly four months later, with those yields a third of a percentage point lower, of the 72 economists recently polled by the National Association for Business Economics, not one expected a recession this year. This appears to be a sanguine consensus indeed.

To date, the yo-yo years -- which reflect multi-decade declines in trend growth -- seem to have confounded the consensus and policymakers alike, who are still hopeful that anemic economic growth is a temporary anomaly.

Under the circumstances, the risk of being blindsided by the cycle runs high. In this new terrain, with heightened cyclical risk in the U.S. and abroad, it becomes more critical than ever to be able to successfully navigate the cycle. ECRI’s cyclical framework and its array of leading indexes provide early warning for ahead-of-the-turn, real-time cyclical monitoring.

ECRI’s updated International Cyclical Outlook for 21 countries was released on Friday.

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Failure to Launch

ECRI February 8, 2014

As ECRI had predicted, the recent consensus that the economy was "taking off" has turned out to be dead wrong, with U.S. growth falling sharply of late. More