Growth‑Rate‑Cycle

Growth‑Rate‑Cycle Classification (Four‑Phase Model)

(No reference to Ellis, but fully aligned with the methodology you use.)

The cycle is classified using year‑over‑year growth rates of key indicators:

  • Labour market: US.NFP, US.UNEM
  • Production: US.IPI
  • Demand: Housing + mortgage approvals
  • Liquidity: M4G, policy rates
  • Inflation: CPI, PPI
  • Markets: S&P 500, FTSE 100

1. Acceleration Phase

Characteristics:

  • NFP growth rising
  • IPI growth rising
  • Housing and mortgage approvals improving
  • Money supply growth stabilising or rising
  • Equity indices trending upward
  • Inflation stable or falling

Interpretation: Early‑cycle expansion; strongest forward returns.

2. Peak Growth Phase

Characteristics:

  • NFP still strong but slowing
  • IPI growth flattening
  • Housing momentum topping
  • Inflation rising
  • Policy tightening begins
  • Equity markets show divergence (breadth weakens)

Interpretation: Late‑cycle overheating; risk of reversal increases.

3. Deceleration Phase

Characteristics:

  • NFP slowing sharply
  • Unemployment bottoming then rising
  • IPI contracting
  • Housing and mortgage approvals falling
  • Money supply growth weakening
  • Equity markets rolling over
  • Inflation peaking

Interpretation: Cycle downturn; recession risk elevated.

4. Trough / Early Recovery Phase

Characteristics:

  • NFP stabilising at low levels
  • IPI bottoming
  • Housing stabilising
  • Policy easing begins
  • Money supply growth turning up
  • Equity markets bottoming and beginning to lead

Interpretation: Transition to recovery; best forward returns