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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 02 2013

The Micawber Principle: "something will turn up"

Last year – the 200th anniversary of the birth of Charles Dickens – we recalled the Micawber principle: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

In that context, it is ironic that the central banks of the two largest English-speaking countries are engaged in massive quantitative easing (QE) to spur lending in an effort to violate the Micawber principle. Appropriately, the two-pound coin issued to celebrate the bicentennial of Dickens’s birth had one of Mr. Micawber’s more hopeful maxims inscribed along its edge: “something will turn up.”

Many firmly believe that the global industrial growth outlook has brightened significantly, largely because of the improvement in a variety of widely-followed surveys, including purchasing managers index (PMI) data, in recent months. How accurate are such perceptions?

ECRI’s Global Industrial Growth Long Leading Index sheds light on the question, alongside recent updates to our array of leading indexes which tell us if growth prospects have indeed “turned up.”