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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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Mar 28 2014

U.S. Service Sector Outlook Clarified

In early March the Institute for Supply Management’s Non-Manufacturing Index fell to a four-year low in February, which was largely blamed on the harsh winter weather. Accordingly, the latest release of the Markit Flash U.S. Services Purchasing Managers Index showed that service sector activity picked up in March. However, Markit’s chief economist tempered the optimism when he noted, “the survey is clearly flashing some warning lights as to whether the economy has lost some underlying momentum.”

A much clearer message is given by the growth rate of ECRI’s U.S. Leading Services Index (USLSI), which is designed to anticipate cyclical turning points in U.S. service sector growth.

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Price Signals of Global Slack

ECRI March 14, 2014

World trade price growth has seen almost continuous deflation since early 2012, and its renewed weakness suggests even more slack in the global economy. More