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 19 2014

Warming Up or Stalling Out?

As the year began, ECRI warned of weak growth prospects, especially for the construction and housing sectors, which had been key drivers of economic growth. Indeed, with the Fed’s “stall speed” measure, based on gross domestic income growth, falling to 0.1% in the first quarter – never having dropped this low except around recessions –U.S. economic growth stood far below the 2% “stall speed” threshold. Meanwhile, with year-over-year growth in the personal consumption expenditures deflator, the Fed’s inflation target measure, creeping up lately, inflation seems to be simmering.

As Fed Chairman Yellen has noted, labor markets have not fully recovered, and inflation is still below the Fed’s objective, justifying the Fed’s policy of keeping rates low for a long time. In this context, ECRI’s latest report on the outlook for inflation and economic growth provides critical insights into whether the U.S. economy will allow the Fed to stay the course as planned.

Related News & Events

US Money Slump Flashes Warnings as Economy Contracts

The Daily Telegraph May 30, 2014

The US seems caught in a Japan-style trap, endlessly masking the effect by stealing a little extra growth from the future with artificial stimulus. More


Cognitive Dissonance at the Fed?

ECRI May 30, 2014

As Fed and CBO trend growth estimates fall to the Fed's 2% recessionary stall speed, how does economy reach escape velocity? More