Economic Compass

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.

Those GDP weights step at each era boundary the compass already publishes, rather than applying one present-day snapshot across the whole history back to 1955; within an era, a region’s weight holds constant. The measure is real GDP in constant 2015 USD, from the World Bank (CC BY 4.0), so a currency move alone can’t change a region’s influence without a matching change in real output. The document steps weights at every era boundary it publishes; the plot, though, merges boundaries closer than 24 months apart into a single visible mark, so one mark on the page can span more than one weight step underneath it. That change moved the published quadrant label on about 5% of monthly readings — 42 of them, almost all before 1999; today’s reading, and its label, are essentially unchanged.

That means the compass measures the economies it can actually see, weighted by their size, and never speaks for one it can’t name. Together they add up to a bit under half of world output on growth, and roughly two-thirds on prices — phrased loosely on purpose, because the exact share moves whenever the weights step and a typed number here would drift out of date.

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.

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 euro area is absent from both, 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.