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Friday, January 13, 2017

ECRI's Weekly Leading US Index Up to a New Record High

The Economic Cycle Research Institute, ECRI -- a New York-based independent forecasting group, released its latest readings for its proprietary Weekly Leading Index (WLI) today.

For the week ending January 6, 2017:

  • WLI was 144.9 up slightly from the prior week's reading of 144.6
  • WLI Growth was 12.2%, up from the prior week's reading of 12.0%.
Here is my chart of weekly WLI and its growth rate compared to quarterly US GDP back to 1994:

Chart of WLI and WLI growth vs GDP Growth (click charts to expand)

This is ECRI's chart showing WLI's weekly growth rate back to 1974:
Weekly ECRI Press Release Graph


Weekly ECRI vs the S&P500 and GDP Growth
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Notes:
  1. Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average.
  2. ECRI uses the WLI level and WLI growth rate to HELP predict turns in the business cycle and growth rate cycle respectively. Those target cycles are not the same as GDP level or growth, but rather a set of coincident indicators (including production, employment income and sales) that make up the coincident index. Based on two additional decades of data not available to the general public, there are a couple of occasions (in 1951 and 1966) when WLI growth fell well below negative ten, but no recessions resulted (although there were clear growth slowdowns).
  3. For a better understanding of ECRI's indicators, read their book, "Beating the Business Cycle: How to Predict and Profit From Turning Points in the Economy
ECRI's Book

is Available on Kindle

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