October 13, 2009 , 5:04 pm Leading indicators and the shape of the recovery Michael Shedlock has an awesome takedown of ECRIâs claim that its indicators (a) have successfully predicted turning points in the past (b) point to a sold recovery now. Iâd add that this is a really, really bad time to be relying on conventional indicators. Why? Basically, because in a zero-interest rate world â the three-month rate was .066% last I looked â especially one thatâs suffered from a collapse of the shadow banking system, conventional indicators donât mean what they usually mean. Increases in the monetary base arenât especially expansionary. The yield curve more or less has to slope up, even if no recovery is expected. And so on. So historical correlations, to the extent that they exist â and as Shedlock points out, ECRI is claiming a much better record than it really has â canât be counted on to prevail. Thereâs really no alternative to making fundamental analyses of the macro situation. http://globaleconomicanalysis.blogspot.com/2009/10/look-at-ecris-recession-predicting.html