Read and translate the text,  pay attention to the words and word combinations given in bold print.

                                         Divining the Future

The case for keeping a close eye on leading economic indicators

Is this a good time for your company to expand? Or for you to splash out on that new car? The answer may well depend on the likelihood of a sharp economic downturn in the next year or two. Economic forecasts say the risk is slight: in The Economist 's most recent monthly poll, the average prediction of America's GDP growth this year was a robust 3.5%. However, other guides to the future, known as leading economic indicators, tell a different story. Several of these suggest that the slowdown in many economies in the second half of last year was not just a “ soft patch ”, but may prove more prolonged.

Take the OECD's* composite leading indicator for the G7 economies. Its six-month rate of growth has fallen for ten consecutive months. Similarly, the growth rate of the most closely watched leading indicator for the American economy, published by the Conference Board**, a business-backed group, has plunged in the past year. On past experience, this points to a sharp slowing of GDP growth in the first half of this year.

Should you trust the leading indicators or the forecasts? Embarrassingly, conventional economic forecasts have rarely correctly predicted a recession. In late 1981, when America's economy was already shrinking, the average forecast for GDP growth in 1982 was over 2%. In the event, output fell by 2%. In August 1990, the very month that America dipped into its next recession, the consensus was that the economy would grow by 2% in 1991; again, output declined. In early 2001, the average forecast for growth that year was also close to 2%. We now know that a recession was already under way.

Some economists argue that recessions are typically caused by unpredictable shocks, such as the events of September 11th 2001 or a sudden rise in oil prices. But that excuse will not do, at least for 2001: official figures show that the recession started months before the September attacks. The trouble is not the unpredictability of events, but that the economic models on which forecasts are based are not up to the job. Despite containing hundreds of equations, the models are notoriously bad at predicting recessions because they tend to extrapolate the past, for most of which the economy has been expanding. Yet recessions stem from abrupt changes in the behaviour of firms and consumers.

Scrutinising indicators that have given advance warning of downturns in the past, such as share prices, order books or the shape of the yield curve, seems more helpful than relying on models. There is no single magic measure; each leading indicator has failed to predict a turning point at one time or another. But leading indicators are unlikely all to give false signals at the same time, so a composite index that combines several economic and financial measures stands a good chance of spotting changes in the economic weather.

 

robust growth	быстрый, устойчивый рост
soft patch	«слабая полоса» или период слабых данных.
shrinking economy sluggish economy	замедление темпов экономического роста период, характеризующийся отсутствием экономической активности
argue	утверждать
extrapolate the past	опираться на опыт прошлого
order books	объем заказов
yield curve	кривая доходности
composite index	составной индекс

NOTE:

1)OECD *- Organization for Economic Cooperation and Development- Организация экономического сотрудничества и развития (ОЭСР)

2) Conference Board** -National Industrial Conference Board (NICB) - Совет национальной промышленной конференции: организация, созданная в 1916 г. для сбора и распространения информации, имеющей важное значение для бизнеса и промышленности (США).

Section 3     Inflation

 

1. Notable Quotable. Comment on the following:

" Inflation might be called prosperity with high blood pressure". Arnold Glasgow