Industry Group Performance

Returns that could have been achieved for the period 1980 to March, 1996, using the top 20 industry groups in each phase vs. returns of the S&P 500.

Five Phases of the US Business Cycle

PHASE LEADING INDICATOR DESCRIPTION Easeoff The economy peaks and starts to decline. QInsight’s macro-economic variables include industrial production, hours worked, non-farm payroll employment and initial unemployment claims. Plunge The economy continues to decline while interest rates peak. Federal Reserve policy turns stimulative. QInsight’s macro-economic variables include interest rates and the adjusted monetary base. Revival 1 The economy starts to recover while interest rates continue to decline. QInsight’s macro-economic variables include hours worked, initial unemployment claims, non-farm payrolls and industrial production. Revival 2 Economy continues to strengthen and inflation begins to slowly rise. QInsight’s macro- economic variables include commodity price indexes, the consumer price index and capital spending. Accelerate The economy is growing so fast that the Federal Reserve will begin to tighten monetary and credit policies. QInsight’s macro-economic variables include the federal funds interest rate, the consumer price index and the adjusted monetary base.

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