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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Jan 29 2014

Great Expectations

Capturing the giddiness among the great and the good in Davos, Kenneth Rogoff observed last week, “People are euphoric here, they think everything is going to be fantastic.” That might be the view of the movers and shakers gathered on a mountaintop to discuss economic inequality – effectively the main topic on the agenda – but it is not a perspective we share.

Our latest study includes a review of international productivity and labor market trends that is not particularly promising. It also fits with the low trend growth characteristic of “the yo-yo years” that ECRI has discussed since before Lehman.

Cyclical volatility, combined with low trend growth, is what virtually dictates more frequent recessions. In 222 years since the late 18th century, the U.S. experienced 47 recessions. Following the Great Recession, however, policymakers have been making an all-out push to eliminate recessions altogether, in part by trying to suppress financial market volatility. The 48th recession is likely to be recognized before they are ready to face the futility of attempts to eliminate business cycles in market economies.

Related News & Events

Job Growth Not Trending Higher

ECRI January 14, 2014

Even ignoring December data, the household survey, which sees far smaller revisions, counts a million fewer jobs created over the prior 12 months than the establishment survey. More


Secular Stagnation

Fox Business News January 22, 2014

GDP growth (yoy) has been less than 2% for four straight quarters, something we've never seen except during or right after a recession. More


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