![1990 Recession:
Large Industrial Downturn
Alan Greenspan:
"In the very near term there's little evidence that I can
see to suggest the economy is tilting over [into
recession]." July, 1990
"...those who argue that we are already in a recession I
think are reasonably certain to be wrong." August, 1990
"... the economy has not yet slipped into recession."
October, 1990](https://image.slidesharecdn.com/leadingindicatorframework-130211113851-phpapp02/85/Leading-Economic-Indicator-Framework-9-320.jpg)
Leading Economic Indicator Framework
- 1. Variant Perception’s Leading Economic Indicator Framework Leading Economic Indicators (LEI) enable the forecasting of > Recessions > Turning Points in Growth > Inflation > Market Volatility
- 2. Turning Points are Hard to Identify Most analysts merely extrapolate recent trends
- 3. LEIs Forecast Turning Points Variant Perception focuses on leading indicators
- 4. Consensus Economists Focus on the Wrong things > Vintage Data & Lagging Indicators
- 5. Wrong Focus - Vintage Data (1) Almost all economic data is revised 3 and 12 months later > Inflation > Savings Rates > Unemployment > Industrial Output > GDP > Trade, etc This makes for greater historical accuracy, but does not help inform decision makers in real time
- 6. Wrong Focus - Vintage Data (2) > Making decisions based on incomplete data or, even worse, data that will tell a completely different story upon revision, is a recipe for disaster > Variant Perception focuses on economic data and prices that are not revised (ISM survey, yield curve, initial unemployment claims, etc)
- 7. Wrong Focus - Lagging Indicators > Inflation typically reaches its peak in the middle of a recession and troughs when an expansion is strongest > Unemployment is always at its lowest point when a recessions starts
- 8. Consensus Economists Do a Bad Job at Forecasting Recessions “Quite simply, the record of failure to predict recessions is virtually unblemished. Only 2 of the 60 recessions that occurred around the world during the 1990s were predicted a year in advance” Prakash Loungani, Assistant to the Director External Relations Department, IMF
- 9. 1990 Recession: Large Industrial Downturn Alan Greenspan: "In the very near term there's little evidence that I can see to suggest the economy is tilting over [into recession]." July, 1990 "...those who argue that we are already in a recession I think are reasonably certain to be wrong." August, 1990 "... the economy has not yet slipped into recession." October, 1990
- 10. 2001 Recession: Dotcom Bust (1) The Economist, January 2005: “In a survey in March 2001 95% of American economists said there would not be a recession.” The recession started the month of the survey, March 2001, and industrial production had already been contracting for five months.
- 11. 2001 Recession: Dotcom Bust (2) Alan Greenspan, May 2001: “Moreover, with all our concerns about the next several quarters, there is still, in my judgment, ample evidence that we are experiencing only a pause in the investment in a broad set of innovations that has elevated the underlying growth rate in productivity to a level significantly above that of the two decades preceding 1995.”
- 12. 2008 Recession: Subprime Bust, Banking Crisis Ben Bernanke, October 2008: “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.” The 2008 recession started in December 2007
- 13. Leading Indicators make it Possible to Forecast …
- 14. (1) Recessions
- 15. (2) Turning Points in Key Metrics, such as IP and ...
- 17. (3) Inflation
- 19. Contact Us to Learn More Variant Perception has also developed Leading Economic Indicators for the following measures > Business Cycle Financing > Durable Consumption > Real Money Growth > Shipping > Market Volatility > Construction > Manufacturing > Key Commodities > Car Sales And many more...