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 06 2012

Japan Facing Fifth Recession in 15 Years

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

Last month, growth concerns prompted the Japanese Cabinet to announce its second stimulus package in as many months, with November’s $10.7 billion package coming on the heels of October’s $5.1 billion stimulus.  If these packages fail to boost economic growth as hoped, the consensus view will become more negative. In fact, a new recession would be Japan’s fifth in 15 years, a pattern that aligns with ECRI’s “yo-yo years” concept, where the convergence of higher cycle volatility and lower trend growth virtually dictates more frequent recessions in developed economies.

ECRI’s latest update to the JALLI provides a definitive economic outlook for Japan, clarifying whether a recession is unavoidable and, thus, if Japan is in the grasp of the yo-yo years.

Related Insights

The Yo-Yo Years

ECRI March 1, 2012

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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The Tell-Tale Chart

ECRI December 7, 2012

Reviewing the indicators used to officially decide U.S. recession dates, it looks like the recession began around July 2012. More