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Anyone Else Follow ERCI on the Economy?
Old 08-14-2009, 03:48 PM   #1
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Anyone Else Follow ERCI on the Economy?

Anyone else follow ECRI (Economic Research Council Institute)? ECRI | Home

I have been following them since 1999, and their economic cycle predictions have been eerily accurate.

Well today they came out with a new amazing prediction from their model:
A U.S. future economic growth gauge rose in the latest week, as its yearly growth rate surged to a 26-year high, suggesting that recovery will commence at the briskest pace in decades, a research group said on Friday. WLI Growth At 26-Year High
This runs totally counter to my instincts which have led me to assume we would have a very weak recovery due to our severely weakened financial system. A lot of professionals hold this view as well. This prediction says we are way wrong.

Even though I have followed ECRI for a long time, I have never taken action on their predictions because my investing strategy has no room for predictions. Nevertheless, even as a spectator I find their macro calls fascinating.

I really look forward to seeing how this one plays out!


P.S. For those wondering about what other stuff ECRI predicts, they also predict inflation cycles. Peruse their web site - in particular this page Recession-Recovery Watch In April ECRI predicted the recession to end this summer. They also predicted the start of the recent recession to within a month of what the NBER finally declared almost a year? later.

ECRI publishes their model results every Friday morning and there is usually an associated press release. I check their "Resources" and "News" pages almost every Friday to get the latest.
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Old 08-14-2009, 03:52 PM   #2
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Isn't it amazing that the projections seems to spit between deflation and hyper-inflation, depression and rapid recovery?
We truly live in interesting times.
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Old 08-14-2009, 03:58 PM   #3
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Actually, the diversity of predictions no longer amazes me! Some predictions even try to predict things that couldn't possibly coexist! It took me a few years to get used to it, but that was long ago........
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Old 08-14-2009, 04:00 PM   #4
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Interesting. They're usually pretty good at forecasting. What isn't stated is: How much (if any) of this "surge" is attributable to a short-term spike in auto sales from Cash for Clunkers?
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 08-14-2009, 04:13 PM   #5
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They don't state stuff like that. I am going to guess that the cash for clunkers data is so recent as to not have much effect on their model yet. And maybe their models are too "macro" for such detail anyhow - I have no idea. I think their prediction is based on how strongly the WLI has roared ahead over at least the past three months! You can see the curve at the end of the "Monthly Leading, Coincident, and Lagging Indexes (growth rates %) graph in the middle of the page of Recession-Recovery Watch, top green line. I guess the WLI growth rate is giving no sign of rolling over just yet, and so they can compare with past cycles that have reached these kinds of extremes and the resulting economic conditions.

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Old 08-14-2009, 04:26 PM   #6
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Excellent stuff. Thanks for sharing.

I loved this one

Where else are you going to learn how "doggie down time" and vibrator sales predict the economic cycle?
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Old 08-15-2009, 08:52 AM   #7
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ECRI is a unique service which I follow closely and have find very useful. Technically their specialization is not economic forecasting, it is business cycle change - more like timing and relative strength stuff. In that area they are clearly ahead of the pack and have an excellent track record.
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