Tuesday, June 16, 2009

ECRI Weekly Leading Index rises sharply, strongly suggesting that an end to the U.S. recession is now in clear sight

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) rose sharply by +1.71% vs. +1.40% last week, and its annualized growth rate rose very sharply from -7.1 to -4.7, well above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and although it remains a bit below the flat line, its distinct upturn does strongly suggest that recovery is on the way.

According to ECRI, "With WLI growth rising to its best reading in a year and a half -- namely, since the recession began -- economic recovery prospects are brightening rapidly." Reuters notes that ECRI has said that "yearly growth will turn positive in the summer months."

My personal outlook is that: The recession of the U.S. economy that started in December 2007 and sharply accelerated in August 2008 finally looks as if recovery may be underway within the next few months.

Although the current economic reports continue to show significant weakness, there is also a vast amount of potential stimulus (especially from the Federal Reserve) in the pipeline that could kick-start the economy within the next couple of months. Please keep in mind that employment is not a leading indicator, so we could continue to see further employment losses or gains in unemployment even as recovery is underway.

-- Jack Krupansky


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