Friday, July 23, 2010

ECRI Weekly Leading Index flat for a second week

The Economic Cycle Research Institute (ECRI) Weekly Leading Index (WLI) was flat compared to a week ago which was revised upwards slightly from a week ago.

The WLI is well below its peak in April, and roughly at the same level as a year ago when the recovery was just getting underway in earnest.

The annualized growth rate for WLI is moderately below zero, moderately lower than a week ago. Some pundits view the growth rate (now -10.5%) as indicating a recession, but ECRI does not concur.

We had a massive bulge of stimulus, which peaked and dissipated. The big negative WLI growth rate is simply telling us that we are well down from that peak bulge. If the WLI were to deteriorate significantly further from here (the level of a year ago) for a couple more months, that would be a problem, but with a couple of flat weeks now a moderation looks more likely, to me.

The WLI suggests that the economic is likely to slow a bit further, but as of this week a double-dip recession is still not in the cards from the WLI perspective.

-- Jack Krupansky

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