The Economy Tracker

This is the second installment in The Rhythm of the $ystem series. To start reading from the beginning, click here:

The Economy Tracker is an indicator that tracks the US Economy as it moves through a Credit Cycle. It is a data driven system which breaks each cycle down into five distinct phases. The function of which is then evaluated based upon how it has historically performed during the same phase of each credit cycle since the end of WWII. This information is then used to determine the current phase of the current credit cycle in as close to real time as possible.

The goal of The Economy Tracker is to paint a clear picture of the most current, relevant, and up to date economic conditions. Once understood, it always serves as a guide for your financial journey through life.

Below are examples of how The Economy Tracker changes as the economy flows through a credit cycles:

Why it’s important to you.

Knowing the true state of the economy will free you of the needless anxiety of worrying about a financial meltdown when there is no need to do so. Which contrary to popular belief and nonstop doomsday headlines, economic conditions are healthy the vast majority of the time.

Think of how much easier life would be if you could accurately see economic storm clouds on the horizon. By doing so you could take steps to financially secure yourself before the storm hits. Examples of this would be increasing your savings, reducing expenses, and holding off on big ticket purchases like cars or luxury items, etc. right before economic conditions deteriorate. You would then know when the safest time is to make those purchases and begin investing again.

You will also be much less susceptible to falling for the shenanigans of the market doomsday charlatans. These are the people who are more concerned with sounding smart and generating engagement online than doing the work needed to provide helpful, accurate, and relevant information. Listening to them leads to unnecessary anxiety in your life.

However, there are times when it is prudent to get your financial life in order and prepare for the worst. While the worst case scenario seldom happens, preparing for it at the right times will minimize the anguish and disruption to your life. Sometimes, that’s the best we can do.

The better you ride out an economic storm, the better shape you will be when it ends and the gettin’ gets good again. Because no matter how bad it gets, the good times always return.

Once the good times return you will be one of the first to know, giving you an edge in life. This will allow you to let your guard down at the right times so you know when it is best to live a little, spend more freely, and enjoy what life has to offer.

How the Economy Tracker Operates

- Deep breath. This part gets a little wonky. -

The Economy Tracker is dictated by compiling a few dozen pieces of publicly available economic data. That information is then broken down into their characteristics during each phase as the economy flows through a Credit Cycle.

The data includes Interest Rates (Fed Rates/Bond Yields), Economic Growth, Economic Activity, Yield Curves, Debt Growth, Liquidity, Business Fundamentals and Profit Margins of publicly traded companies, inflation rates, unemployment rates, and much more.

That information is then matched to it’s characteristics during each phase over the last several decades.

A weighted numerical value is then applied to the data that in turn provides the closest view of the current economic state.

- Exhale. Wonkiness is over. -

How to Use the Economy Tracker

One of the best parts of the Economy Tracker is that the phases do not change often, so it is not necessary to check it every day or even every week. A simple once-a-month check-in will suffice. This is because credit cycles take time to play out. About six years per credit cycle since the end of WWII.

Once the economy moves from one stage to another, you still do not need to make drastic changes immediately as the economy takes time to move through each stage due to its monstrosity. Instead, you can make little changes week-by-week and month-by-month to minimize the disruption to your daily life.

In the coming days expect to see posts regarding:

• What constitutes a Credit Cycle.

• Where we are in the current cycle and what that means.

• Skepticism of The Economy Tracker

Click the link below for the next installment in the The Rhythm of the $ystem series entitled, Credit Cycles.

If you enjoyed this post and and found it useful, do me a favor and hit the like (heart) button.

To stay up to date on this journey, hit Subscribe now if you are not yet subscribed.

Click the Leave a comment button if you have any questions, comments, or need something clarified. Don’t be shy. The main point of “The Rhythm of the $ystem” is to constantly improve. Questions and comments help us both.

If someone you know might be interested in this post, go ahead and click Share.

If someone you know might be interested in this subject, go ahead and click Share The Rhythm of the $ystem.

Learn. Improve. Pass on.