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.



U.S. Inflationary Pressures Rise

U.S. inflation pressures rose in January...

The Economic Cycle Research Institute's Future Inflation Gauge, which is designed to anticipate cyclical swings in the rate of inflation, rose to 120.0 in January from an upwardly revised 118.7 in December, the research group said.

"The index is clearly telling us that there is no downturn or easing of inflation in sight. This is at odds with the market's initial response to today's weaker-than-expected jobs report," said Lakshman Achuthan, Managing Director of ECRI.

The index's annualized growth rate, which smooths out monthly fluctuations, rose to 4.5 percent in January from an upwardly revised 3.4 percent in December.

"Inflation has gone from below 2 percent to above 3 percent. While these are not huge numbers of inflation, we do have a 50-percent rise in the overall rate of inflation," Lakshman Achuthan, Managing Director of ECRI, said.

"If we go from 2 to 3 that is a relatively large rise, and the future inflation gauge is telling us is that this type of rise is likely to continue," he said.

Looking forward, Achuthan said inflation rates of 3.5 and 4 percent are reasonable expectations.

"But a return to very strong inflation like we saw in the 70s is not in the cards." he said.