Friday, February 20, 2009

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

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose moderately sharply by +0.89% vs. -0.48% last week, and its annualized growth rate rose moderately to -24.0 vs. -24.5 last week, but remains near its record low for its 60-year history of data of -30.2 for the week ended December 5, 2008, which is well below the flat line, suggesting that the economy will be struggling in the months ahead.

I do not have a quote from ECRI today, but I am sure that they would agree that despite this one-week improvement, the near and medium-term outlook remains quite gloomy.

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.

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 currently shows no sign of an imminent end. There was a modest flattening of the WLI recently, but even that seems to have reversed. Still, the WLI has not set a new low for ten weeks now.

Although the current economic reports show significant weakness, there is also a vast amount of potential stimulus in the pipeline that could kick-start the economy within the next couple of months.

-- Jack Krupansky


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