Search Results for: business cycle

U.S. Business Cycle Indicator Morgan Stanley’s cyclical indicator is still in “downturn.” The entry into the “downturn” phase suggests lower returns for stocks and risky assets. Picture source: Morgan Stanley Research

ISM Manufacturing Index and U.S. Long-Term Business Cycle The risk of recession increases when the Macro Composite is above 90% and the ISM Manufacturing Index is falling. Picture source: Pictet Asset Management

Output Gap and Stages of the U.S. Business Cycle The shift towards monetary easing by the Fed could extend the U.S. economic expansion. Picture source: BlackRock

Can Small Business Predict the Business Cycle? A widening high-yield spread remains a useful indicator for predicting a coming recession in the current interest rate environment. You may also like “A Widening of Credit Spreads Is Very Useful to Predict a Recession.“

Stages of the Business Cycle as of April 30, 2019 Although global growth remains positive, this chart shows that most major economies are entering the late business cycle phase. Picture source: Fidelity Investments

Why Is Core Inflation So Low Compared To Previous Business Cycles? The Consumer Price Index Less Food & Energy (Core CPI) is very low compared to previous business cycles in the US, for several reasons: – not fast-rising money supply – globalization: inflation is a global phenomenon – lack of wage acceleration – increase in…

Is the Fed Funds Rate Lower Today than in Previous Business Cycles? Yes! and unfortunately, artificially low interest rates are associated with unnecessary debt, lower productivity and zombie firms in this late-cycle expansion. Picture source: Blackrock

Why the Current Business Cycle Can Continue? Even if we are in a late business cycle, real Fed funds rate is near zero, the Fed remains “patient” at the moment and has little influence on the long end of the yield curve. The 30-Year Treasury Rate minus 10-Year Treasury Rate spread has a normal upward…

Why U.S. Productivity Is Lower Than Previous Business Cycles? The real yield is the most important measure of financial tightness. But as the real yield is near zero, artificially low interest rates are then associated with unnecessary debt, zombie firms and lower productivity than previous business cycles. Zombie firms cannot invest, innovate and increase productivity. …

Real GDP Increased Moderately Compared to Previous Business Cycles Even if we are currently in a late cycle, history helps us to predict the future and this cycle should not end immediately. Each line begins with the peak of the previous business cycle, as determined by the NBER. (Picture source: Blackrock)