ECRI Weekly Leading Index indicator rises moderately but remains deep in recession territory

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately (+0.71% vs.-0.29% last week and seven consecutive weeks of decline) and the six-month smoothed growth rate rose slightly (to -11.7 from -11.8), but that is still well below the flat line, suggesting that the economy will be struggling in the months ahead.

According to ECRI, "With WLI growth near a 28-year low, a business cycle upturn remains out of sight."

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 some amount of stimulus as well as potential problems in the pipeline.

Given that the WLI has deteriorated so much in the past two months, 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 (unchanged) and a moderate level of confidence that there is no more than a 50% chance of recession (up from 45%) 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