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Quick, unbiased view of the economy...

"Insensibly one begins to twist facts to suit theories, instead of theories to suit facts."        — Sherlock Holmes, A Scandal in Bohemia

Baseline and Rate of Change (BaR) Analysis Grid©
The BaR Analysis Grid© goes beyond simple trend analysis and offers several important dimensions to economic analysis. 

  • Includes a broad array of economic indicators that correlate closely with the ups and downs of the business cycle and represent all aspects of the economy.
  • Takes a jumble of economic indicators and forms them into understandable pattern.
  • Calculates the mean of coordinates (MoC), which signals the general condition of the economy. The MoC is especially useful when comparing grids from different periods of time.
The baseline represents a recession threshold for each economic indicator. The vertical axis shows whether the indicators are above or below the baseline. The horizontal axis specifies the rate of change, positive or negative. Recessions occur when most indicators have moved to the left side of the grid and many are near or below the baseline.

Grid Overview 10 8

Importantly, the baseline and rate of change values are calculated with fairly complex algorithms. For most indicators, three-month exponential moving averages (EMA) are used. When a three-month EMA is used, although an indicator may trend negative during one month, the three-month EMA can remain positive, as it is weighted by the previous two months.

In addition, the unique range for each indicator is used to calculate both the baseline and rate of change. For example, if an indicator has a range of change of 100%, and there was a monthly percent change of 30%, the rate of change would be 30 / 100 = 30%.  If another indicator has a range of change of 10%, and there was a monthly percent change of 3%, the rate of change would also be 30%, as 3 / 10 = 30%. This gives each indicator a common base of 100 when mapped to the grid, resulting in proportional rates of change and percentages above and below the baseline. 
 


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