ECRI Weekly Leading Index indicator falls moderately and remains deep in recession territory

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) fell moderately (-0.43% vs.-1.08% last week) and the six-month smoothed growth rate fell sharply (to -8.9 from -7.6), which is well below the flat line, suggesting that the economy will be struggling in the months ahead.

According to ECRI, "With the WLI falling to a fresh five-year low, a business cycle upturn looks increasingly distant."

The bottom line is that the ECRI WLI remains "flashing red." Alas, even the ECRI WLI is not a guaranteed, fool-proof economic indicator, especially when the data is mixed and there is a lot of stimulus as well as potential problems in the pipeline.

Given that the WLI has continued to deteriorate in the past two weeks, I will increase my own forecast for the probability of recession, again...

I am revising my personal assessment upwards to a high level confidence that there is no more than a 80% chance of recession (up from 75%) and a moderate level of confidence that there is no more than a 45% chance of recession (up from 40%) based on the fact that we are seeing some hints of moderation as well as hints of some worsening mixed in with all of the gloomy news.

I am somewhat optimistic that the U.S. economy will escape a full-blown recession, but I do have to recognize what the data itself is signaling to me, as well as ECRI's assessment and recession "call."

The bottom line is that the economy remains at "the edge" of a recession, but persists in refusing to overtly "fall" into recession.

-- Jack Krupansky