ECRI presentation / view on global monetary policy

[MichaelB]

ECRI is known for business cycle analysis, and some forum members read or track their work, which is usually only available to subscribers. Here’s a copy of a presentation with talking points they recently (4/18) gave at a financial conference titled “The Risk of Mistaking Cyclical for Structural”.
Presentation here https://ecri-prod.s3.amazonaws.com/...yclicalforStructural_27thMinskyConference.pdf

The venue was the annual “Minsky Conference”, sponsored by the Levy Economics Institute (Bard College). All of the presentations are available and can be found here 27th Annual Hyman P. Minsky Conference on the State of US and World Economies

 

[NW-Bound]

Uh oh!

Better start tightening my covered call strike prices. It's a good thing my WR is so low, and I have no plan nor desire to blow more dough.

 

[OldShooter]

Just some more chattering monkeys. Nate Silver deals with ECRI specifically. See my post #16 in this thread: http://www.early-retirement.org/forums/f44/its-a-thing-91394.html.

... I'll refer you again to Nate Silver's book "the signal and the noise." He actually uses a couple of pages to discuss ECRI's forecasting:

" ... In September 2011, ECRI predicted a near certainty of a "double dip" recession. 'There's nothing policy makers can do to head it off.' it advised. 'If you think this is a bad economy you haven't seen anything yet.' ... The S&P 500 gained 21 percent in the five months after ECRI announced its recession call, while GDP growth registered at a fairly healthy clip of 3.0% in the last quarter of 2011."
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GDP growth in 2012 was 2.2%. Not wonderful, but hardly the disaster that ECRI so confidently predicted for late 2011. IOW their prediction wasn't simply early, either. It was just flat wrong. ...

Not to insult or put you down, @MichaelB. It's been proven over and over, though, that economic forecasters and economic forecasting are basically a waste of time. For those who are interested, Silver is definitely worth a read.

 

[flintnational]

I read the report. While I think the thesis has merit (productivity and demographics are/have peaked in the world and future growth will be subdued) IMO, it is hard to estimate the impact of a couple billion Indians and Asians moving into the middle class over the next few decades. This single demographic title wave could easily dwarf the slowing productivity and demographics in developed countries. Thanks for posting.

 

[MichaelB]

Just some more chattering monkeys. Nate Silver deals with ECRI specifically. See my post #16 in this thread: http://www.early-retirement.org/forums/f44/its-a-thing-91394.html.


Not to insult or put you down, @MichaelB. It's been proven over and over, though, that economic forecasters and economic forecasting are basically a waste of time. For those who are interested, Silver is definitely worth a read.

My OP probably wasn't clear enough. The purpose of this thread is not to debate the worthiness of ECRI or their analysis, it's to alert interested members of a recent presentation. The link is not to a forecast or a prediction, it's an analysis.

If you're not interested, fine. No need to belabor the point, the thread was not intended for you.

 

[NW-Bound]

...The link is not to a forecast or a prediction, it's an analysis.

The point of the presentation, in case anybody misses it, is that the current economic boom not just in the US but also world-wide is not a secular trend but a cyclical one.

That said, it may go on for some more time yet. But unless some changes that are more fundamental happen, the current growth cannot persist. The presenter worries that central bankers over the world may raise rates too soon, and choke off the temporary growth we see now.

Of course, something miraculous may happen that the presenter cannot predict. For example, Elon Musk may take all of us up to Mars, where we start a new prosperous life far different from what we know now.

PS. For a diversion, watch "The Martian", a 2015 movie starring Matt Damon, to see what life would be like on Mars.

 

[copyright1997reloaded]

MichaelB, thank you for the interesting post. While I won't comment on whether ECRI's forecast of the future is accurate or not, I will state that in the long run the only way standards of living can be increased is through increases in productivity. [As the article points out, the other aspects of GDP or other measures of overall economic activity are also affected by demographics, i.e. population growth. While that is interesting, I am more interested in per-capita measures.]

What is most disturbing about the charts is the downward apparently secular trends in productivity growth. Is our historical 4% SWR potentially at risk because of this? (Something to ponder.)