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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Mar 03 2014

Throttling Back in Tandem

The central banks of the world’s two largest economies are reducing monetary policy accommodation under the presumption that growth will not stall out, even though bad things have often happened when the Fed has tightened before. Indeed, a recent fund manager survey finds that – as on the cusp of the Great Recession – only about 1% think the U.S. is in recession. In essence, the overwhelming majority is sanguine that an economic contraction is nowhere in sight. What if they are mistaken about the economy’s resilience?

The cycle always turns, so economic growth will surely revive at some point. A close examination of ECRI’s leading and coincident indexes for 21 separate countries reveals whether now is the time when the major central banks, throttling back in tandem, can achieve a smooth handoff as global economic growth takes off.

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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