5/21/11

Prices and business cycles

Business cycles drive prices and prices drive business cycles. (Click on the chart to enlarge it. Blue vertical areas indicate recessions).

Let me explain. This chart shows the following.

1. Rising growth of prices are followed by a recession or by a period of very slow economic growth. The slowdown period depends on the rise in prices. The higher the prices, the sharper the slowdown.

2. A period of slowdown is followed by slower growth in prices.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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