Economies do not grow smoothly. They expand, overheat, slow, sometimes contract, and recover. Each phase tends to favour different assets and sectors.
FinVolio classifies each economy by two observable things: whether growth is above or below trend, and whether underlying inflation is rising or falling. That gives four phases: expansion with rising inflation, expansion with easing inflation, slowdown with rising inflation, and slowdown with easing inflation.
Why it matters
The top-down investment approach starts here: identify the phase, then the sectors and assets that tend to do well in it. Cyclical sectors such as materials and industrials tend to lead in early expansion; defensive sectors such as utilities and health care tend to hold up better in slowdowns. These are tendencies, not rules.
On FinVolio
The Where the cycle is panel on the home and economy pages applies the rules openly, with the indicator behind each reading one click away.
See the data: ISM manufacturing PMI, US yield curve.
General information, not advice.