ECRI: Economic Forecast Remains Terrible

According to the U.S. Weekly Leading Index (US WLI) released on 12/19/08 published by Economic Cycle Research Institute (ECRI), the economy remains at the low point in the cycle. Lakshman Achuthan of ECRI states:

With WLI growth hovering near last week's all-time low, the U.S. recession is set to worsen significantly in the coming months.

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

[herbert hoover:]

"As a leading indicator, .. . economic conditions in the future are going to be worse than they are today."

Is that any reason not to buy stocks? Come on, people get out there and Buy Buy Buy!

2008 Dec 21 02:00 PM

[nmelendez:]

I am, I am!!!!! i am buying GOLD stocks. :)

2008 Dec 21 04:54 PM

[John Lounsbury:]

Steve - - -

You say: "The US WLI has a slight lead over business cycles."

Is that the weekly (which is possibly nearing a bottom) or monthly reading which still is pointing straight down?

2008 Dec 21 11:17 PM

[Steven Hansen:]

John -

this index tries to look ahead approximately two quarters. any negative number shows economic degradation, the more negative the number is - the faster the economy should be degrading six months from now.

even if the curve starts climbing, it would still be showing a negative growth meaning the economy should keep going down but at a slower rate. it is currently indicating the rate of degradation has stabilized. When the value climbs above zero, it indicates that in approximately 6 months the economy will start to grow.

steven hansen

2008 Dec 22 12:09 AM

[John Lounsbury:]

Steve - - -

Thanks. Now I get it.

John Lounsbury

2008 Dec 22 09:23 AM