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Friday, April 03, 2009

Upturn in ECRI's WLI Growth Rate Says US Business Cycle Recovery Ahead

Today the Economic Cycle Research Institute, or ECRI an independent forecasting group based in New York, said its Weekly Leading Index (WLI) moved hither and its growth rate rose to a 23-week high signaling a turn in the business cycle is on their radar.

The WLI and its growth rate are designed to predict future turning points in the business cycle (recessions and recoveries.)
Today ECRI said its WLI rose to 106.7 for the period ending March 27, 2009. In the prior week WLI was 106.2 and its record low was on March 6, 2009 at 105.3.

The WLI growth rate rose to -22.2%, up from -23.2% last week. Its record low was set on December 5, 2008 at -29.9%.

Click chart courtesy of ECRI for full size image

Commenting on the data, Lakshman Achuthan, managing director at ECRI said
"With WLI growth rising to a 23-week high, an upturn in the U.S. growth rate cycle is now in clear sight."

The weekly index rose due to higher stock prices and stronger housing activity, and was partly offset by higher interest rates and claims for state jobless benefits.
My chart of WLI vs WLI growth and the S&P500 (on page 5 of the April issue of Kirk Lindstrom's Investment Letter) shows WLI bottomed March 6th, 2009, within days of the most recent stock market bottom when the S&P500 hit 676.

This chart courtesy of chartoftheday shows the duration of all US recessions since 1900.

The current recession, now entering its 16th month, is already longer than average and equal to the longest recessions (1973 & 1981) since the Great Depression.

More ECRI Articles:
Discuss the data with Lakshman Achuthan, managing director at ECRI, in our facebook forum "ECRI - Economic Cycle Research Institute." If you are not already a member, then you may need to request invitation to "Investing for the Long Term" on Facebook.

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