Forecasting Business Conditions

The Brookmire Economic Service places conspicuous emphasis upon forecasting by means of what we have called historical comparison.¹ Unlike the Babson organization, however, it does not assume that there is an inherent and predeterminable limit to the magnitude of any given movement of business activity. It relies instead upon two theories: first, that supernormal activity is certain to subside and subnormal activity to revive, and, second, that major reversals in the trend of various financial and business factors tend to occur not simultaneously, but in a definite sequence. The Brookmire Economic Chart Company (predecessor of the Brookmire Economic Service) was a pioneer in constructing barometric indexes by combining several statistical series each of which tended to reverse its direction of movement in advance of the factor which it was desired to forecast. By observation and simple statistical analysis J. H. Brookmire, the founder of the organization, arrived at the generalization that the beginning of an upswing of a business cycle is marked by the rise of an index of potential bank credit, followed within a few months by a rise in security prices, the latter, in

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