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Friday, August 27, 2010

ECRI WLI Update - Weekly Leading Index Data & GDP Growth

ECRI's WLI Up & WLI Growth Rate Up; GDP Growth Down
The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released their latest readings for their proprietary Weekly Leading Index (WLI) this morning. (More about ECRI)
For the week ending August 20, 2010
  • WLI  stood at 120.9, upfrom the prior week's revised reading of 120.7.  The lowest reading for WLI this year was 120.4 for the week ending July 16.
  • WLI growth moved higher for the fourth week in a row to minus 9.9 percent from a revised minus 10.1 percent a week ago.  
Chart of WLI and WLI growth vs GDP Growth
Click to view full size chart
Q2 GDP Growth  - Second Estimate
Today's chart shows the second estimate for Q2 GDP growth which came in today at a positive 1.6%, revised down from  2.4% as shown on last week's chart.

Since ECRI releases their WLI numbers for the prior week and the stock market is known in real time, you can often get a clue for next week's WLI from the weekly change in the stock market.

Chart of S&P500 vs ECRI's WLI

Click for Full Size Image

  1. The WLI for the week ending 8/27/10 will be released on 9/3/10.
  2. Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average.
Before you claim understanding of ECRI's WLI, make sure you read the article  "ECRI Weekly Leading Indicators Widely Misunderstood."
"Bottom line, neither the “experts” predicting that the sky is falling based on the WLI, nor the other “experts” indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about...  A slowdown in U.S. economic growth is imminent, but a new recession is not." 
Disclosure:  I am long SPY (charts and quote) in my personal account and in the "Explore Portfolio" in  "Kirk Lindstrom's Investment Letter."

Kirk Lindstrom's Investment Letter Performance

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