WHO World Order

The World Health Organization (WHO) is worried about contagion spilling over into the global economy. For instance, Atlas had to cancel its first Pie Party ever! Coco’s will miss our company, but after reaching out to some of our regular attendees it was decided this postponement was best. As this evolution continues, Atlas has been watching a group we’ve been fans of for some time, the Economic Cycle Research Institute (ECRI). They take a unique perspective on the economy, choosing to study components of the business cycle instead of the traditional econometric forecasting most economists utilize. We haven’t written anything about them for a while because the business cycle has maintained an orderly upward trajectory for over a decade, so ECRI’s releases have been somewhat repetitive. But that is starting to change. They recently penned this op-ed piece for CNN. In it, they are quite critical of the Federal Reserve’s recent actions as well as the government’s response to the pandemic. While Atlas is not here to comment on the efficacy of plans put into place, we are interested in ECRI’s concern about the business cycle. Initially, they felt economic weakness would be caused by failure in the global economic supply chain. In other words, could merchants meet the demands of consumers. ECRI now believes the issue has morphed into a demand problem. Shutting down service establishments like restaurants, bars, schools, and gyms will “decimate” revenues and require firms to reduce staffing. Ultimately, ECRI believes the probability of a recession is growing because demand is being negatively shocked. ECRI studies business cycles but they are not charged with dating recessions. That role goes to the National Bureau of Economic Research (NBER). If a recession is on the horizon (or already here) NBER will let us know. Unfortunately, they aren’t concerned with timeliness. For instance, the last economic recovery was underway for over a year before they were willing to tell us the last recession ended. It could be several quarters after the next recession starts before we get an official word from NBER. The WHO world order is evolving, but we won’t know if it officially sets off a recession for a while. In the meantime, Atlas will update you on ECRI’s releases as they change.