ECRI: Weekly Leading Index at 18 Month High

According to the U.S. Weekly Leading Index (US WLI) released on 12 June 2009 published by Economic Cycle Research Institute ((ECRI)), there are continuing signs of economic improvement. Lakshman Achuthan of ECRI states:

With WLI growth rising to its best reading in a year and a half – namely, since the recession began – economic recovery prospects are brightening rapidly.

The US WLI has a slight lead over business cycles.

As a leading indicator, the WLI is forecasting economic conditions approximately six months in the future. I have simultaneously published a complete economic analysis – please refer to my other article published today.

Disclosure: None.

Comments

[thiazole:]

I've said it before and I'll say it again: ECRI's WLI is the best leading indicator index out there. Combined with the ECRI's commentary, it has been impeccible in predicting recessions and recoveries. Just look at the longer term WLI chart above - it predicted the fall and rise during each recession and only had one false alarm in 1987. The ECRI is on record in 1987 saying that the WLI was giving a false alarm and that a recession wasn't imminent (ie, the ECRI itself hasn't been wrong in predicting any recessions or recoveries). Many people have quibbled about their timing (ie, sometimes their predictions are several months before the event and sometimes they are a couple months late), but you can't argue with their record of being correct in predicting the actual turn.

The reason their timing varies is that they are predicting when the tide has turned so strongly that almost nothing could prevent the recession/recovery. Sometimes that happens months before the event and sometimes it happens after the event (ie, if stimulus was timed perfectly during the second month of a recession, the economy might pull out and history would say there was no recession at all).

Jun 12 12:45 PM

[Owen B:]

heard the ECRI guy talking today and he said something like, "if rising interest rates and oil prices could derail a recovery, then we'd always be in recession." good point!

Jun 12 09:37 PM

[Owen B:]

here's link to that statement (on Fox) www.businesscycle.com/.../

Jun 13 04:39 PM

[willydo:]

Steve,

I could not find the other article you refer to above that was published today. I normally get them both.

Thank you,
Willydo

Jun 13 05:21 PM

[John Lounsbury:]

willydo - - -

It is still on his Instablog. Should be out as an article tomorrow.

Jun 14 01:50 AM

[scott a:]

Couple the ECRI's reading along with the Coppack confirming indicator and you have us coming out for sure. I went long and hard once the coppack gave it's confirmation. Love the ECRI.

Jun 15 07:42 PM