Tuesday, June 23, 2009

ECRI: Recession Will Be Over By End of Summer; WLI Registers Largest Three-Month Gain in History

NEW YORK, June 19 (Reuters) - A gauge of future U.S. economic growth rose along with its yearly growth rate, reaffirming hope that yearly growth will turn positive in the summer months, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 36-week high of 117.1 for the week ending June 12, from an upwardly revised 116.2 the previous week (see chart above). In recent weeks, the group has forecast that the U.S. recession will end sometime during this summer, as its yearly economic growth reading rebounds from late-2008 lows.

The index's annualized growth rate spiked to an 85-week high of minus 0.6 percent from the prior week's revised rate of minus 3.5 percent (MP: And compares favorably to the year-end growth rate reading of -28.1%, see data here).


"With WLI annualized growth rocketing up almost 30 percentage points in six months (MP: from -28.1% in December), it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

MP: The WLI has increased nine weeks in a row - the last time that happened was almost 20 years ago - and the index has increased in 13 out of the last 14 weeks (data here). The index of future economic activity is now at a 9-month high of 117.1, the highest level since October 3 of last year (see chart above). Further, the 12-point, three-month increase in the WLI from the early March low of 105.1 is the largest three-month gain in the history of the WLI back to 1967.

5 Comments:

At 6/23/2009 10:55 AM, Blogger misterjosh said...

Even if the recession is over, it won't mean the recovery will have begun. The finance situation doesn't seem stable enough to nurture real growth in the next couple years - but that's just my gut. I'm not an economist.

 
At 6/23/2009 12:47 PM, Anonymous Anonymous said...

Mark, what is your opinion of ECRI? Their historical calls seem impressive, yet I can't find too many people out there who are aware of them.

 
At 6/23/2009 1:35 PM, Blogger aldom said...

"With WLI growth rocketing up almost 30 percentage points in six months, it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

This comment fails to mesh with the chart and data points provided.

From where does the 30% come from. It is nt from 105 to 117

 
At 6/23/2009 2:06 PM, Blogger Mark J. Perry said...

Aldom: If you look at the ECRI data (link has now been added to the post), you'll see that ECRI calculate some kind of annualized growth rate in the index, and it's currently at -.60%. Back in December the growth rate was about -30%, so the 30 percentage point increase is from -30% in December to almost 0% now.

 
At 6/23/2009 5:08 PM, Anonymous Mr. Econotarian said...

Can we "claw back" the remaining "recovery" money once we are "recovered"? Very little has actually been spent yet.

 

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