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The ECRI (Economic Cycle Research Institute) said Friday morning:

"The continued easing in WLI growth indicates that U.S. economic growth will start decelerating in the coming months." [my bold emphasis added]

This is the first negative shift in ECRI's assessment of the U.S. economy's growth prospects in the past year. I consider this shift to be very important, even though it perhaps seems to be just a subtle change in tone.

Just the previous week, on Jan 29, ECRI said:

"With the WLI staying near the previous week's 83-week high, the U.S. business cycle recovery is set to keep going in the months ahead."

ECRI's WLI (Weekly Leading Index) bottomed with the market March 6, 2009 and ECRI turned increasingly upbeat on the economy very shortly afterwards (e.g starting on Mar 12, Mar 13, Mar 20, etc, etc).

For a much fuller discussion of my latest market views, please see my Feb 5 Instablog "Major Negative Shift as Structural Issues Impact Cyclical," which follows seven published articles on the market decline, starting with my Jan 23 article (Jan 21 Instablog), "Emerging Markets Leading Global Markets Down, as They Did Going Up," and a very large number of real-time market Instablogs.

I have followed ECRI WLI (Weekly Leading Index) very closely for a long time. I especially pay attention to it as a "reality check" around potential key market inflection points, such as right now.

I also look at the JP Morgan Global PMI's available early each month on the ISM site, see my Feb. 4 article, which quoted from the release the previous day noting that globally:

"...it is worrying to see that the manufacturing and inventory led rebound has yet to fully filter through to services, leaving growth heavily dependent on the industrial sector."

I used ECRI's WLI in a number of articles when I started submitting to Seeking Alpha to try to stay in sync with the huge market rally and very weak recovery. My second article on this site on July 26, 2009, "ECRI vs. Roubini, Round Two," juxtaposed the then strong bullishness of the former against the then bearishness of the latter. (By the way, in a Jan. 29, 2010 Instablog i wrote, "Roubini, Good Time to Pay Attention to Again"; I've been following his site closely since 1997.)

Below is my updated table. I've cut it off at the beginning of October, when WLI's Annualized Growth Rate (AGR) hit a 60-year record high, and it has been declining ever since. WLI is again flattening out, with its 4-week moving average going negative for the first time since a three-week span in late Oct-early Nov.

Note that the values for WLI and AGR shown in the table are those as originally reported in the press by ECRI each Friday morning, and if subsequently revised the next week. These are the numbers that I see in "real time," they are not the final revisions, which are available here.

Wk Ending WLI 1-wk Chg 4-wk MA 1-wk Chg 4-wk Chg AGR 1-wk Chg 4-wk Chg
29-Jan 130.9 (0.5) 131.7 (0.2) 0.8 21.5 (1.2) (2.3)
22-Jan 131.4 (0.8) 131.8 0.2 1.4 22.7 (0.8) (1.3)
15-Jan 132.2 0.1 131.7 0.5 1.5 23.5 0.0 (0.9)
8-Jan 132.1 0.5 131.2 0.4 1.4 23.5 (0.3) (1.2)
1-Jan 131.6 0.9 130.8 0.3 1.9 23.8 (0.2) (0.2)
25-Dec 130.7 0.4 130.5 0.3 2.1 24.0 (0.4) 0.6
18-Dec 130.3 (0.4) 130.2 0.4 2.0 24.4 (0.3) 0.2
11-Dec 130.7 0.5 129.8 0.9 1.8 24.7 0.7 (0.3)
4-Dec 130.2 0.7 129.0 0.6 0.8 24.0 0.6 (2.1)
27-Nov 129.5 0.6 128.4 0.2 0.1 23.4 (0.8) (2.9)
20-Nov 128.9 1.7 128.2 0.2 (0.2) 24.2 (0.8) (2.7)
13-Nov 127.2 (0.6) 128.0 (0.2) (0.1) 25.0 (1.1) (2.2)
6-Nov 127.8 (0.9) 128.2 (0.1) 0.1 26.1 (0.2) (1.7)
30-Oct 128.7 0.4 128.3 (0.1) 0.7 26.3 (0.6) (1.1)
23-Oct 128.3 0.4 128.4 0.3 1.6 26.9 (0.3) 1.9
16-Oct 127.9 (0.2) 128.1 0.0 1.9 27.2 (0.6) 2.9
9-Oct 128.1 (1.0) 128.1 0.5 2.8 27.8 0.4 4.9
2-Oct 129.1 2.0 127.6 0.8 2.6 27.4 2.4 4.9






Source: ECRI.

Disclosure: No positions mentioned.

Source: What ECRI Is Saying About the Markets