Friday, June 26, 2009

ECRI Leading Index: First Pos. Growth in 22 Months

NEW YORK, June 26 (Reuters) - A gauge of future U.S.economic growth rose, and its yearly growth rate turned positive, raising hopes that the end of the recession is insight, a research group said today. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 37-week high of 117.6 for the week ending June 19, from a downwardly revised 117.0 the previous week.

The index's annualized growth rate spiked to a 97-week high of 2.1% from minus 0.6% a week ago. It was ECRI's highest yearly growth reading since the week ended August 10, 2007, when it stood at 3.4% (see chart above).

"Following a 28-week upturn, WLI growth has broken into positive territory for the first time in over 22 months -- an affirmation that an end to the recession is at hand," said Lakshman Achuthan, managing director at ECRI.


At 6/26/2009 5:12 PM, Blogger fboness said...

Hey, look! A green shoot!

At 6/27/2009 8:56 PM, Blogger BxCapricorn said...

Since the ECRI does not tell us their proprietary recipe for their leading indicator, I go to Investopedia and find that the Conference Board's Composite Index of Leading Indicators is made up of these ten other indicators:

1. Average Weekly Hours Worked By Manufacturing Workers
2. Average Number of Initial Applications for Unemployment Insurance
3. Amount of Manufacturers' New Orders for Consumer Goods and Materials
4. Speed of Delivery of New Merchandise to Vendors From Suppliers
5. Amount of New Orders for Capital Goods (Unrelated to Defense)
6. Amount of New Building Permits for Residential Buildings
7. S&P 500 Stock Index
8. Inflation-Adjusted Monetary Supply (M2)
9. Spread Between Long & Short Term Interest rates
10. Consumer Sentiment

Think about how any of these ten have been manipulated by data engineers over the past few months, to sustain a recovery, before you buy in.....

At 6/27/2009 9:13 PM, Blogger BxCapricorn said...

I was going to do this for fun, but if any of your students want to strut their stuff, here's an idea:

Go to this page, and around half way down on the right, you have a link for the NY Times various indicators.

Isolate and combine the numbers from these indicators in such a way as they match the ECRI graph, and you've backward-engineered their "leading indicator". You may also realize how these guys missed (again, see "Depression").


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