Economic Compass
The Economic Compass tracks growth and inflation momentum for the US and euro area, growth momentum for Japan and Korea, and inflation momentum for Japan, Korea and China, each measured as a z-score against its own long-run trend. It is a diagnostic instrument built from public data, not a forecast and not investment advice: it describes where the economy appears to be right now, not where it is going next.
Nine gauges track the individual series behind the two axes. Colour is used only where a threshold was explicitly defined; every other gauge is plain information. Every number carries its source and an as-of date.
This page renders a live phase-space plot of growth and inflation momentum, with sparkline gauges for the underlying series. Drawing it needs JavaScript. The data behind it is public either way, published as JSON at constantin.glez.de/data/compass.json.
Scrub the strip below the plot — with a pointer or a finger, or click it and use the arrow keys — to follow one month in both views at once.
Trigger status
Four governance triggers sit behind this page. A trigger that is met recommends a review — a conversation about whether anything should change. None of them is an instruction to buy or sell anything. Two are evaluated here; the other two need data this page does not carry, and say so rather than reading as a quiet “no”.
| Trigger | Threshold | Status | Detail |
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Gauges
Contributions
Each axis is a composite of several series. A blank contribution means the series has not reported for this month yet, not that it is zero.
| Axis | Series | Contribution |
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Method
The chain from a raw series to a plotted z-score: raw level, year-over-year change, a z-score against an EMA-weighted baseline of the series’ own past (ten-year half-life, at least eight years of history required before a series is used), then a composite in which each economy is weighted by its own GDP and each economy’s indicators count equally among themselves — so a country that happens to publish four series doesn’t outvote one that publishes three. Nothing is weighted by how many numbers a statistics office chooses to release.
That means the compass measures the economies it can actually see, weighted by their size, and never speaks for one it can’t name. On growth that is the US at 56%, the euro area at 32%, Japan at 8% and Korea at 4% — together about 47% of world output. On inflation China joins, and the split becomes the US 41%, China 27%, the euro area 23%, Japan 6% and Korea 3%, covering about 63%.
The absences are the part worth knowing. China publishes no industrial production, retail trade or unemployment this method can use, so it is missing from growth entirely; India and Indonesia are absent from both. An earlier version handed Asia a flat 40% on both axes so that Japan and Korea could stand in for those missing economies, which quietly gave two countries worth 5% of world output more than seven times their own weight. Measuring less, and saying so, turned out to be the more honest instrument.
Two of the nine gauges measure something else entirely: not growth or inflation, but what US equities cost. Both are the US whole-market earnings yield minus a real 10-year rate — the compensation for holding equities instead of an inflation-protected bond; the two cards differ only in which real rate. The yield itself is 100 × (a ten-year trailing mean of real US non-financial corporate earnings, from OECD national accounts) ÷ (the real market value of US non-financial corporate equity, from the Federal Reserve’s Z.1). It is not CAPE and does not equal it: the universe is every US non-financial corporation rather than the S&P 500, and earnings are counted pre-tax where index earnings are counted post-tax. An earlier version of these cards derived the earnings side from Shiller’s CAPE file directly; that input is retired, in favour of the whole-market earnings yield described here. Shiller’s data hasn’t left the page, though: the long-run card still takes its real rate from Shiller’s own construction — the 10-year Treasury yield less trailing ten-year inflation — and Shiller’s CPI series still deflates the earnings yield itself on both cards. Each card’s fine print names the yield and states it as a percent, never inverted into an implied multiple. The euro area is absent from both cards, unlike on the growth and inflation axes where it carries real weight: its national-accounts history begins only in 1999, and a ten-year trailing mean needs a decade of history before its first reading — too short a run since 1999 to rank honestly against the US’s longer one.
Every reading is point-in-time from the latest published vintage; macro series are revised, so a historical point differs from what was knowable on the day it was first published. The composite draws on Ray Dalio’s public writing on economic machine cycles; this page is Constantin’s own implementation, not affiliated with or endorsed by Dalio or Bridgewater. A series missing from the newest month is carried forward from its own last reading for up to three months before it drops out, so the composite stays full instead of shrinking to whichever handful of series happened to report first — the honest cost is that the newest point on the plot is a better match for last month’s settled reading than for this month’s.