ECRI Weekly Leading Index hangs in there but declines modestly even as growth rate rises

Talk about mixed signals on the economy. The recovery from the recession continues to poke along a bit too slowly for most people, but at least the trend is still positive. The Economic Cycle Research Institute (ECRI) Weekly Leading Index (WLI) continues to wobble a bit aimlessly, declining a little bit this week, to 122.2 from 122.6, while the WLI annualized growth rate actually rose moderately, to -8.7% from -9.2, remaining modestly above the psychologically important -10.0% level that some pundits (but not ECRI) view as the threshold for a recession for two consecutive weeks. The bottom line is that the WLI has remained roughly flat since the beginning of July. That is not great, but this is at least not a worsening of the outlook. The much-feared double-dip recession is being kept at bay.

As ECRI puts it, "After a brief plunge in the late spring, the WLI has been fairly stable throughout the summer and into September, suggesting that it is still premature to predict a new recession."

The WLI is well below its peak in April, and modestly lower than the level of a year ago (128.7) when the recovery was just getting underway in earnest.

We had a massive bulge of stimulus, which peaked and is now somewhat 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 for a couple of months, that would be a problem, but  we're not headed in that direction at the present time.

The WLI suggests that the economy 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. Still, the outlook does remain, as Ben Bernanke has said, "unusually uncertain."

-- Jack Krupansky