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Predicting/Preparing for Economic Transitions 25

only one tool available for businesses to leverage. An impor-
tant group of economic barometers are financial indicators
because the finance and credit environment creates the life-
blood of any business cycle.

Key indicators are financial dimensions such as the risk
spread between government bonds and the market. For the
US, this would be US Treasury bonds and the market, e.g.
junk bonds, commercial paper. This indicates how “tight”
money and credit will be for businesses to invest. Another
important group of business cycle indicators are the indica-
tors that look toward the future. These forward oriented
indicators are available in almost every country around the
globe. The key is that these types of indicators capture what
businesses are currently experiencing and believe they will
experience in the future. It is the collective consciousness
of where businesses “believe” their own business’s markets,
industries, and microeconomic environments are headed.

Institute of Supply Management Survey

An excellent example of one of these forward looking indi-
cators is the Institute of Supply Management Survey pub-
lished by the Institute for Supply Management (ISM).

The Institute for Supply Management (ISM) is the largest
supply management association in the world and was origi-
nally founded in 1915. Their mission is to drive higher stand-
ards for the supply management profession through research,
promotional activities, and education. ISM currently has over
40,000 supply management professionals with a network of
domestic and international affiliated associations.

The Institute of Supply Management’s Survey looks at
many key indicators of economic and business cycle trend-
ing. The major categories of their index metrics are as
follows: