Friday, July 17, 2009

ECRI Weekly Leading Index falls moderately, but still indicates an imminent economic recovery

The Weekly Leading Index (WLI) from the Economic Cycle Research Institute (ECRI) fell moderately by -0.78% vs. +0.90% last week, but its annualized growth rate rose moderately from +6.2 to +7.0, well above its record low for its 60-year history of data of -29.7 for the week ended December 5, 2008, and its distinct upturn strongly suggests that recovery is on the way.

This was the fourth consecutive positive reading for the WLI growth rate since August 10, 2007, over 22 months ago.

The WLI growth rate has risen for 16 of the past 18 weeks.

According to ECRI, "The recession is already ending. With WLI growth surging to a five-year high, the recession's days are numbered, and the coming recovery is looking more resilient."

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 firmly underway within the next few months.

Although a double-dip recession or "W" recovery cannot be discounted, it is becoming quite clear that the overall U.S. economy is on the verge of positive growth of spending and output, even if unemployment is still problematic.

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 we could continue to see further employment losses or gains in unemployment even as recovery is underway.

-- Jack Krupansky

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