Brian Beaulieu has served as CEO and Chief Economist of ITR Economics™ since 1987, where he researches the use of business cycle analysis and economic forecasting as tools for improving profitability.
1) What does it take to convince you?
The answer for me is “five.” Specifically, I need five leading indicators going in the same direction before I can get all excited (well, as excited as any economist can get) about the leading indicators telling us that a fundamental shift is coming.
- We currently have two that are solidly “green-lighting" the second half of 2020. We need three more.
- Both housing and the JPMorgan Global PMI are now in tentative rising trends. Each has a better than 50/50 probability of continuing to rise. If they hold, that would make four. Close!
- Number five could be any number of a handful of indicators. It could be one of our proprietary early-turning signals, or it could be one of the other tried-and-true. We’ll keep pinging the spectrum of leading indicators and let you know as soon as we see it. We may even Tweet about it! It is a good bet that the ITR speakers will mention it in their presentations to public and private audiences as soon as it occurs.
2) We can trace the secondary decline in one of our leading indicators to social media activity that made people “jumpy.” This caught our eye because “confidence,” per se, is not a good upside indicator. We maintain that the next business cycle rising trend will occur for solid, economic reasons. Are you ready?
- Are you able to put aside the hype of the news cycle to focus on what a shift in the leading indicators means for your business or portfolio? You will not only sleep better, seeing the future; you will make better decisions.
- Are you able to think ahead of the crowd, as in a half-business cycle ahead of your competition? This enables you to buy when others are selling and sell when others are buying. Assume the crowd is “late” to any given action, and you can be positioned to move at a more economically rational time. You will need courage to do this. That is another reason you need the “five” described above.
- It is imperative that you start planning early next year for what you are going to do for your business and within your business to mitigate the probable negative economic impact of 2022-23. Strategize now so you can implement before the downside shifts hit you hard in that cycle.