In the post immediately below, I commented that there was no press release yesterday for some reason from ECRI related to the release of its Weekly Leading Index. In the past few hours, notice of a Reuters press release dated yesterday has now been added to the "News" section of ECRI's website. Here is the release:
(Reuters) - A measure of future U.S. economic growth was unchanged in the latest week, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index stood at 120.6 for the week ended July 9, unchanged from the previous week, which was originally reported as 121.5.
The index was last below 120.6 in the week of July 24, 2009, when it measured 120.3, according to ECRI.
The index's annualized growth rate fell to minus 9.8 percent from minus 9.1 percent the previous week, originally reported as minus 8.3 percent.
So, ECRI was noncommittal re whether the worsening WLI growth rate in conjunction with the evolving proprietary data is pushing them toward a new recession call.
What I truly don't like in the data I am seeing is that Consumer Metrics has reported July 15 data. This was at 100 (average) on June 30 and now is 93. Its own 91-day growth index is low and dropping. At -2.7% it is the lowest since what that organization dates as a new consumer downturn began at the beginning of 2010.
It appears from the historical data on their website that all throughout the last "Great Recession", only 3 months had average readings below the current average of less than 96 for July (only half through this month, of course). So, leaving aside growth rates to focus on absolute levels of economic activity, the ECRI data, and the Consumer Metrics data are consistent with all sorts of other data such as Discover/Rasmussen's polling data of consumers and small businesses, Gallup.com's "main in the street" polling of elective spending and hiring/firing, and others that that the cyclical upturn has been weak and may already have peaked.
The investing conundrum is that the reflex is to buy Treasuries on economic weakness. But are consumer prices really falling? Is the supply of Treasuries rising or falling? Does the Federal Government have a plan to protect its financial position if (when?) the economy fails to have its hoped-for rendezvous with Rosie (Expectations, that is)?
If your answers are similar to mine, then fundamentally you are uncomfortable with Treasury debt either to generate real returns or to safely preserve capital. Think Greece and Spain, even though right now things are looking Japanese. What happens if and when there is a run on the bank that is the world's effective central bank, meaning the Federal Reserve Bank of New York and its ally at Treasury?
These are dangerous financial waters the ship of state is going through.
Copyright (C) Long Lake LLC 2010
Showing posts with label Weekly Leading Index. Show all posts
Showing posts with label Weekly Leading Index. Show all posts
Saturday, July 17, 2010
Friday, November 13, 2009
ECRI Update: Growth on Track But Second Derivative Pointing Down
The Economic Cycle Research Institute (http://www.businesscycle.com/) has reported further stabilization or decline in its publicly-disclosed weekly leading index. This blog has reported on ECRI many times; it has a fine track record till now; thought it was late to see the implosion last summer. In any case, here's today's Reuters report on ECRI:
WLI Growth Eases from Record High
November 13, 2009
(Reuters) - A weekly measure of future U.S. economic growth slipped to an 8-week low, sending its yearly growth rate further off record levels reached seven weeks ago, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index edged down to 127.3 in the week to Nov. 6, from a downwardly revised 128.7 the previous week, which the group originally reported as 128.8.
The index's yearly growth rate fell to a seven-week low of 25.3 percent from 26.2 percent last week, which was revised lower from an original 26.3 percent.
ECRI has recently projected that the recovery will be the fastest since the early 1980s, and said the current report is in step with that forecast.
"For four straight weeks WLI growth has eased from a record high, but still remains consistent with a further near-term acceleration in U.S. economic growth," said ECRI Managing Director Lakshman Achuthan.
The weekly index was pushed down by lower commodity prices, Achuthan said.
DoctoRx here. I have done an extensive review of ECRI's data regarding stock prices and pauses in the growth of the WLI. There's not a great correlation. Where there appears to be a correlation is that stock prices follow the acceleration of the WLI, i.e. the "yearly growth rate". With that having moderated, perhaps another light finger has pressed on the scale in favor of a pause or decline in stock prices.
More important IMO are statistical analyses such as those by Jeremy Grantham, Andrew Smithers and even PIMCO, all concluding that stocks (Grantham and Smithers) and financial assets in general, are overvalued.
Getting back to ECRI, though, one wonders if the concern about the massive governmental "stimulating" of the economy will prove well-founded from an investment standpoint. For all we know, the economy starts surging on its own. Evidence that that surge may well happe- even if only a brief one- comes from the various news reports that yet another "stimulus" plan is in the works.
Copyright (C) Long Lake LLC 2009
WLI Growth Eases from Record High
November 13, 2009
(Reuters) - A weekly measure of future U.S. economic growth slipped to an 8-week low, sending its yearly growth rate further off record levels reached seven weeks ago, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index edged down to 127.3 in the week to Nov. 6, from a downwardly revised 128.7 the previous week, which the group originally reported as 128.8.
The index's yearly growth rate fell to a seven-week low of 25.3 percent from 26.2 percent last week, which was revised lower from an original 26.3 percent.
ECRI has recently projected that the recovery will be the fastest since the early 1980s, and said the current report is in step with that forecast.
"For four straight weeks WLI growth has eased from a record high, but still remains consistent with a further near-term acceleration in U.S. economic growth," said ECRI Managing Director Lakshman Achuthan.
The weekly index was pushed down by lower commodity prices, Achuthan said.
DoctoRx here. I have done an extensive review of ECRI's data regarding stock prices and pauses in the growth of the WLI. There's not a great correlation. Where there appears to be a correlation is that stock prices follow the acceleration of the WLI, i.e. the "yearly growth rate". With that having moderated, perhaps another light finger has pressed on the scale in favor of a pause or decline in stock prices.
More important IMO are statistical analyses such as those by Jeremy Grantham, Andrew Smithers and even PIMCO, all concluding that stocks (Grantham and Smithers) and financial assets in general, are overvalued.
Getting back to ECRI, though, one wonders if the concern about the massive governmental "stimulating" of the economy will prove well-founded from an investment standpoint. For all we know, the economy starts surging on its own. Evidence that that surge may well happe- even if only a brief one- comes from the various news reports that yet another "stimulus" plan is in the works.
Copyright (C) Long Lake LLC 2009
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