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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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Dec 23 2013

Inflation Plagues the Fed

With inflation not only holding below the Fed’s target for the past year and a half, but also falling recently to a four-year low despite a declining jobless rate, it is perhaps no surprise that low inflation was repeatedly invoked as a concern by Fed Chairman Bernanke at his final press conference last week. Inflation, or more specifically, its virtual absence, is not only a critical indication of the Fed’s ongoing failure to satisfy its dual mandate, but also comes as a surprise to many who believe the economy is approaching its so-called “escape velocity.”

In this context, ECRI has just completed an in-depth study based on our objective leading indicators of the current state of the inflation cycle, revealing a clear trajectory for inflation – an indicator that will likely be critical to Fed policy in 2014 – in the months ahead.

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Becoming Japan: Update

ECRI December 11, 2013

The ECB rate cut was spurred by a “surprise” drop in Eurozone inflation in Oct. But, U.S. inflation was even lower then, and the Fed’s key inflation measure fell further below its 2% target. More

 

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