"Joe Ellis is a passionate student of consumer behavior. Based on decades of research, Ahead of the Curve spells out his commonsense and remarkably pragmatic approach to forecasting economic upswings and downturns. For those of us interested in what drives economic change, Ahead of the Curve is a must-read."

      --Terry Lundgren, CEO, Federated Department Stores

"In this penetrating and brilliant book, Joe Ellis cuts through the blizzard of data, hype, and confusing statements that swirl around Wall Street. Many books of this type focus on theory; Ellis focuses on experience--what really makes the market and the economy move--drawn from his three decades as one of the Street's most highly respected and successful analysts."

      --Bob Horinats, Vice Chairman, Goldman Sachs

WHAT IS THE UNEMPLOYMENT RATEtelling us? Are we heading into a reces-sion? What is "the Fed" going to do?Every day, vast numbers of conflicting economic reports flood newspapers and television broadcasts. Business-people and investors have little confi-dence in these reports, yet must rely on them to make decisions that will impact their businesses and their stock market portfolios.

Now, a thirty-five-year Wall Street veteran unveils a new forecasting approach that will enable managers and investors to more confidently pre-dict turning points in business and market cycles up to eighteen months in advance--and position themselves to take advantage of them. In Ahead of the Curve, Joseph H. Ellis argues that cur-rent forecasting models fail to put economic information in a context accessible to users. In addition, two critical mistakes--using recession as the primary indicator of economic harm and tracking economic data on a quar-terly basis--obscure the real economic inflection points and lead to costly errors in judgment.

Based on empirical, statistical obser-vation of economic cycles as they have played out over four decades, Ellis shows that a consistent chain of cause and effect extends from consumer spending through industrial produc-tion, and then into capital spending and the closely watched, but deceptive,employment and unemployment reports. Ahead of the Curve outlines a visu-al charting system and provides a prac-tical method for tracking the rate of economic change that will allow readers to:

Compare key indicators and cause-and-effect sequences over several decades

Predict economic upturns and downturns and react before it's too late

Identify and trace the historically consistent drivers of bull and bear markets

Track the impact of interest rates and the Fed on the stock market

Written in clear, nontechnical lan-guage, this book will help executives and investors recognize and react to signs of change that others don't see--and win a sizable competitive advantage.

Preface and Acknowledgments ix

Part I: "Seeing" The Economy

Creating Order from Chaos

1. Seeing Around Economic Corners

2. Making Sense of the Economy

3. Redefining Economic Downturns

4. An Antidote for the Recession Obsession

5. Smart Economic Tracking Getting the Noise Out

6. The Nature of Leading Indicators

Part II: Consumer Spending

The Cornerstone of the Economy and the Stock Market

7. Consumer Spending Drives the Demand Chain in the Economy

8. Consumer Spending, Corporate Profits, and the Stock Market

Part III: Forecasting Consumer Spending

Understanding the Key Indicator Relationships

9. Forecasting Consumer Spending Numbers, Not Psychology

10. Real Earnings The Powerhouse of the Economy

11. Employment and Unemployment The Economy's Deceptive Laggard

12. Interest Rates, Inflation, and the Economic Cycle

13. Interest Rates and the Stock Market A Concerned Look Forward

14. The Link Between Federal Deficits and Interest Rates

Part IV: From Theory to Practice

Applying the Charting Discipline to Your Own Forecasting

15. Forecasting for Your Own Industry or Company

16. Making Economics Happen

 Appendix A: Credit: Consumer Spending's Swing Factor

 Appendix B: Does Charting Economic Cause and Effect Work Outside the United States?

 Appendix C: Major Industry Data Series

 Appendix D: www.AheadoftheCurve-theBook.com

Notes 257

Bibliography 265

Index 267

About the Author 275