Latest ECRI Report – Analyzing the Analyst

There are some new developments in ECRIs latest press release today. For two weeks in a row WLI, the influential weekly leading economic indicator, has gone down and WLI Growth has now dropped to its lowest reading in a year and a half.

Lakshman Achuthan, the Managing Director, just by the act of mentioning that a double dip is unlikely, introduces the idea that such a decline is actually now a realistic possibility. This is his venue and he has made the decision to introduce the issue of the double dip recession.

He also for the first time makes the point that’s been obvious for many weeks, that the continuing decline of WLIG points to a decelerating future growth rate. Again Acuthan made the decision to bring this up now for the first time.

Next week is now set up for a possible market moving press release if there is a third week of decline. Even if his comments mitigate the meaning of a possible three week decline, the market could show a response. It is worth discussing now because it is likely we can see a third week of decline. Such an event would then set up the possibility of a very important four week decline. That could have a marked effect on the market.

ECRI has a good following on the street, where its high priced entry level price tag is not even rounding error for the institutions that subscribe. It is one of those not very well publicized services that has lots of impact with the Street. The press release is below.

Barry Zee

WLI Growth Down, Double Dip Unlikely

February 05, 2010

(Reuters) – A future U.S. economic growth gauge slipped in the latest week, and its yearly growth rate remained at levels reached in August 2009, maintaining a slim chances of a double-dip recession with slower growth in the near-term, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell slightly to 130.9 for the week ended Jan. 29 from 131.4 the prior week.

The index’s annualized growth rate declined for the eighth straight week to 21.5 percent, from 22.7 percent the previous week.

The yearly growth measure has drifted from its October all-time high to its lowest reading since a year and a half ago, but ECRI Managing Director Lakshman Achuthan said trends pointing to a double-dip recession are “nowhere in sight.”

“The continued easing in WLI growth indicates that U.S. economic growth will start decelerating in the coming months,” Achuthan said.

ECRI’s annualized growth rate figure sometimes move inversely to the WLI level, as the latter is derived from a four-week moving average.


One Response to Latest ECRI Report – Analyzing the Analyst

  1. Jon says:

    The ECRI is so powerful that its correlation with the SPX is 1. Tell me where the market is today and I can tell you exactly what Achuthan will say tomorrow. It’s like magic. Or as Erasmus said, “In the land of one-eyed men, blind Achuthan is an idiot…ummm…that can’t be right.

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