Ahead of the Curve book jacket
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Figure 2-1: The chronology of the economic cycle
Figure 2-1
This chart presents the cause-and-effect sequence of economic indicators that governs cyclical uptrends and downtrends in the economy. These cause-and-effect relationships are charted on a year-over-year basis in the following 19 charts.

Note that several of these causal relationships are reciprocal, with each of the two indicators having a circular causal effect on the other (described in Ahead of the Curve as “asymmetrical circular causality”). A good example is the manner in which consumer spending, via its effect on the economy in general, is the primary driver of employment, even as employment (jobs) is a secondary driver of consumer spending itself. In such cases, it is important to distinguish between the leading (e.g., consumer spending) and lagging (e.g., employment) indicator if we are to forecast correctly.