ECRI: Economy Falling at Fastest Pace in 60 Years

According to the U.S. Weekly Leading Index (US WLI) released on 11/14/08 published by Economic Cycle Research Institute (ECRI), economic growth continues to fall. Lakshman Achuthan of ECRI states:

With WLI growth continuing to plumb new lows, not only is there no recovery on the horizon, but the economy is falling off a cliff at its fastest pace in at least six decades. 

The US WLI has a slight lead over business cycles.

As a leading indicator, the WLI is demonstrating that economic conditions in the future are going to be worse than they are today. 

Disclosure: no positions

Comments

[investor88:]

Excellent analysis which the average person overlooks if not for this article!

2008 Nov 16 07:04 AM

[jepittman:]

The data reflects conditions in late October and very early November prior to the elections. The shock of the stock market collapse and the unknown election results caused temporary a panic in the public's mind. In my view this decline is not sustainable for a long period of time. The election is decided, the stock market has shown some evidence of a bottoming process, the Federal reserve has backstopped the credit markets and the political powers are no longer in denial about the seriousness of the problem. It will take a little time but people will calm down and resume a more normal behavior pattern quite soon. This is not to say the recession will end soon but the rate of descent has likely already slowed markedly.

2008 Nov 16 09:40 AM

[jdl51:]

Unemployment is just beginning to accelerate with thousands of new layoffs being announced daily. If any of the big three go under, or if all of them do, there will be unemployment in this country the likes of which we haven't seen in 70 years. With the housing market already under severe stress, foreclosures would increase even more than their already high levels. A few months ago the rest of the world was doing relatively well and could be expected to soften the blow by importing more of our industrial goods, but now one by one the European countries are falling into recession and China and Russia are slowing dramatically. Our ability to spend our way out of this mess is further hindered by the massive debt accumulations of the past eight years and especially of the past few months. The world's ability to absorb all this debt is questionable without significantly higher interest rates. All in all not a very good scenario for our new administration to find themselves in. In my opinion it will take years to work our way out of this mess IF everything goes right. Longer if it doesn't.

2008 Nov 16 04:43 PM

[rsinvestor:]

Just as Florida, California, and Nevada are trying to bottom out from their housing crisis, Detroit stands poised to take their place.

2008 Nov 16 05:59 PM

[Steven Hansen:]

jepittman - this is a leading indicator. this analysis uses data up to 07nov2008. it uses economic pressure points to predict the future. the descent has not "slowed".

as far as foretelling the end of this economic event, i am enjoying listening to the "big boys" give their predictions - from a few months to a decade. to me, the bottom has so many variables in play this may be one of those times you just need to watch and see what happens - things are just too unpredictable.

steven hansen

2008 Nov 16 07:13 PM