GlossaryGlobal Economy Index
Global Economy Index
The Global Economy Index combines four economic series of the world economy into one number: the average of their Z-scores over one year. High values stand for an overheating world economy with rising commodity prices and interest rates, and thus for elevated risk; low values stand for cooling.
Zones
| Range | Rating | Color |
|---|---|---|
| from +1 | High risk | red |
| 0 to +1 | Elevated | amber |
| −1 to 0 | Neutral | yellow |
| below −1 | Low risk | green |
Reference lines are at −2, −1, 0, +1 and +2, with a bold zero line. Above +1 the background is tinted red, below −1 green.
How to read it
- Above +1: On average, all four series are clearly above their yearly average: weak dollar, rising rates, copper stronger than gold, expensive oil. That is an economy running hot, with inflation pressure and the risk that central banks step on the brakes.
- Below −1: Strong dollar, falling rates, gold stronger than copper, cheap oil. The world economy is cooling.
- Individual components: The study only draws the average. A value of +1 can come from four moderately elevated series or from a single very strong one.
The index measures changes from the past year, not an absolute state. A year of steady growth moves the window along with it, and the index returns to zero even if the economy keeps doing well.
Limitations
- Approximation: four components instead of five, see above.
- Timeframe: The series are daily values. Intended for 1D, 4D and 1W. On hourly charts, the yearly window requires 8,760 candles, so the curve usually stays empty.
- Candles, not calendar: The window counts candles. On a crypto chart with weekend candles, 365 daily candles are a calendar year; on a stock chart without weekends, about 17 months.
- Warm-up: The first value only appears once all four series have a full year of history on the chart.