ECRI Weekly Leading Index continues to poke along at a slightly positive trend
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 be relatively weak, but also continues to show incremental improvement, rising moderately this week, to 123.1 from 122.0 (but below the 123.7 level of three weeks ago), and the WLI annualized growth rate rose moderately, to –6.5% from –6.9, moderately above the psychologically important -10.0% level that some pundits (but not ECRI) view as the threshold for a recession. 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. In fact, ECRI is "officially" making the call that there will not be a double-dip recession in the near future, saying that "The good news is that the much-feared double-dip recession is not going to happen."
The WLI is well below its peak in April, and modestly lower than the level of a year ago (129.1) when the recovery was just getting underway in earnest.
We had a massive bulge of stimulus, which peaked and is now somewhat dissipated. The moderately 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."