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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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Jun 14 2013

Weak Japanese Investment Growth

In spite of Abenomics, private nonresidential investment continued to decline in the first quarter. This is worrisome for Japanese policymakers because unless investment growth picks up, the economic recovery is unlikely to persist for long. What are the prospects for a near-term revival in Japanese investment growth?

The relationship between the growth rates of ECRI’s Japanese Long Leading Index (JALLI) and Japanese private nonresidential investment can provide some early answers. Since JALLI growth has been a reliable predictor of cycles in Japanese investment growth, its recent performance suggests where investment growth is likely to head in the months ahead.