ECRI Weekly Leading Index indicator rises moderately sharply again but still suggests a very sluggish outlook

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately sharply (+0.88% vs. +1.18% last week) and the six-month smoothed growth rate rose moderately (from -7.1 to -6.5), but is moderately below the flat line, suggesting that the economy will be somewhat sluggish in the months ahead.

It is too soon to say that the WLI has turned the corner, but it has risen for three consecutive weeks.

The WLI does indicate the economic outlook is still rather weak, but not so weak as to suggest that a recession is absolutely imminent.

According to ECRI, "Despite its latest uptick, WLI growth remains near its worst readings since the 2001 recession, underscoring the economy's heightened vulnerability." Last week they said "It is still possible for prompt policy action to help avert a recession." Two weeks ago they said "WLI growth is now at its worst reading since the 2001 recession. However, the WLI's recent decline is not based on pervasive weakness among its components, suggesting that a recession could still be averted."

I will offer the caveat that the Weekly Leading Index and its smoothed growth rate do not tell us how strong the economy will be six or nine months from now, but do tell us whether whether weakness or strength is more likely a few months from now. It works best to tell us whether a "gathering storm" might be lurking just around the corner. It presently indicates "cloudy weather" for the next few months, but is still not forshadowing major storms in the real economy, even if financial markets and some sectors of the economy may continue to struggle.

-- Jack Krupansky