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Saturday, April 26, 2014

ECRI Weekly Leading Index WLI Lower but Growth is Up

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

For the week ending April 18, 2014:
  • WLI was 134.6 down slightly from the prior week's reading of 1134.9
  • WLI Growth was 4.1%, up from the prior week's reading of 3.9%.
Chart of WLI and WLI growth vs GDP Growth 
(click charts to expand)

Weekly ECRI Press Release Graph

 Weekly ECRI vs the S&P500 and GDP Growth
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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