Competitive Analytics | U.S. Economy 17 Year Low - Competitive Analytics

U.S. Economy 17 Year Low

May 1, 2008

CA’s National Economic Strength Index (“NESI”) hit a 17-year low and is forecasted to trough during May 2009. (Click here for large chart. Will not view on iPad or iPhone). As of March 2008, NESI continued it downward spiral to 330.0, decreasing 4.5 points (-1.35%) from the prior month and 107.6 points (-24.59%) form the prior year.

CA’s comprehensive index is formulated on a 0-to-1000 point scale and encapsulates 76 indicators dating back to January 1930 which directly and indirectly drive the national economy.  CA developed NESI to be used as an extremely reliable leading indicator for macro market conditions and has tested and proven to be a reliable tool for macro-economic forecasting based on its ability to anticipate each of the 9 phases of an economic cycle (Click here for 9 Phases of Economic Cycles).Where is the Economy Headed?

US Economic Forecast

CA’s National Economic Strength Index (“NESI”) hit a 17-year low and is forecasted to trough during May 2009 (Click here for enlarged NESI chart).As of March 2008, NESI continued its downward spiral to 330.0, decreasing 4.5 points (-1.35%) from the prior month and 107.6 points (-24.59%) from the prior year.  CA’s comprehensive index is formulated on a 0-to-1,000 point scale and encapsulates 76 indicators dating back to January 1930 which directly and indirectly drive the national economy.  A score of 500.0 is calibrated to economic equilibrium, scores above 500.0 reflect economic strength, and scores below 500.0 reflect economic weakness.  CA developed NESI to be used as an extremely reliable leading indicator for macro market conditions and has tested and proven to be a reliable tool for macro-economic forecasting based on its ability to anticipate each of the 9 phases of an economic cycle (Click here for 9 Phases of Economic Cycles).

Yes.  We are in recession…9 months ago.  Aligned with negative consumer sentiment and deteriorating global market conditions, the protracting downturn in America’s economy has justifiably fueled the speculation and fear of a pending US recession.  However, these “fears” appear to be a case of misplaced denial, since it’s neither logical nor sensible to be afraid of a pending event when it already happened…9 months ago. Mathematically, NESI’s September 2007 reading of 397.2 already placed the US economy in recession. Amid intensifying depreciating economic indicators and egregious outlooks, CA’s current NESI falls precariously parallel to the recession of the early 1990’s.  Though the National Bureau of Economic Research (the official arbiter on the subject) has yet to officially categorize the nation’s recent downturn as a recession, CA’s NESI suggests otherwise.  CA firmly believes the benchmark for calling a recession is severely outdated.  The national economy continues to plunge amid negative employment growth, the housing sector’s worst downturn in a generation, the accelerating decline of asset values, increased credit losses, a depreciating dollar, the looming threat of inflation amidst commodity price acceleration, and strained economic growth conditions.

14 Months to Recovery…NESI expected to trough during May 2009 at staggering 723 month low (60 years and 3 months).  Although the US economy is expected to continue it’s full downward spiral for the balance of 2008 and into 1Q2009, CA’s Peak-to-Trough Model calls for the US economy to trough during May 2009 when NESI declines to -264.4.  This historically steep decline reflects a decrease of 65.6 points (-19.88%) from the current NESI of 330.0 as of March 2008.  Decisive and immediate steps need to be taken by executive leaders to anticipate these market conditions and minimize potential losses in the short-term as well as strategizing for Phase 6 of the economic cycle which calls for the start of the next expansion phase.  Navigating both a downshifting and up-shifting business cycle is a formidable task, and being equipped with the right quantitative tools and analytical methodologies will minimize risks and maximize opportunities.  CA realizes that every client is unique, and therefore, CA can customize our Economic Strength Indices and Peak-to-Trough Forecast Models for any geographic submarket, sector, industry, company, product, service, or project.