Original at ECRI WLI Growth Rate Up Again
The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released their latest readings for their proprietary Weekly Leading Index (WLI) this morning. (More about ECRI)
- WLI is 123.8, up from the prior week's reading of 122.5.
- The lowest reading for WLI this year was 120.4 for the week ending July 16.
- Since apparently bottoming at -10.3 for the week of August 27, WLI growth moved higher for the fifth consecutive week to minus 7.0% from minus 7.8% a week ago.
- The last positive reading for WLI growth was for the week ending May 28, 2010 when it stood at positive 0.1%.
- The WLI for the week ending 10/1/10 will be released on 10/15/10.
- Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average.
- ECRI uses the WLI level and WLI growth rate to HELP predict turns in the business cycle and growth rate cycle respectively. Those target cycles are not the same as GDP level or growth, but rather a set of coincident indicators (including production, employment income and sales) that make up the coincident index. Based on two additional decades of data not available to the general public, there are a couple of occasions (in 1951 and 1966) when WLI growth fell well below negative ten, but no recessions resulted (although there were clear growth slowdowns).
"Bottom line, neither the “experts” predicting that the sky is falling based on the WLI, nor the other “experts” indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about... A slowdown in U.S. economic growth is imminent, but a new recession is not."
Disclosure: Long SPY