ECRI EXPECTS “VIGOROUS” RECOVERY
From Reuters:
A weekly gauge of future U.S. economic growth hit a year-high in the latest week, sending its yearly growth rate to an all-time high that points to a more vigorous recovery than consensus has shown.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 125.4 in the week to Sept. 4 from a revised 124.6 the prior week, which was originally reported at 124.7.
It was the highest WLI reading since Sept. 5, 2008, when it stood at 126.0.
The index’s annualized growth rate surged to a record high of 21.3 percent from 20.8 the previous week.
“The rise in WLI growth to a record high reinforces our earlier forecast that at least the early stage of the current economic recovery will be more vigorous than the last two,” said ECRI Managing Director Lakshman Achuthan.
Achuthan recently told Reuters that a double-dip recession is highly unlikely, and that the United States is poised for a far stronger recovery than many are projecting.
“We expect non-manufacturing employment — which is where 91 percent of us work — to be positive by year end,” Achuthan said.
“We are talking about recovery that includes jobs growth in the non-manufacturing sector, and we are talking about a recovery that includes increases in consumer spending. So, in spite of the fact that many people look at this recession as being unprecedented and unlike any other, what we’re seeing in our indexes is that there are a lot of similarities to previous recessions and recoveries,” he added.
This week’s index was pushed higher largely to stronger housing activity, according to ECRI.
Source: Reuters
So let me get this straight: In Sep 2008 the ECRI was really high (at 126). At about that point the economy fell off a cliff. So using similar logic I would guess that means we’re about to fall off the cliff again? I realize these folks have been “right” using their odd algorithm, but they misread the level of involvement by the government, and misread employers willingness to start hiring again. I run a company and I have zero interest in hiring for the next few years. Also, the ISM numbers have improved because of the bubble in China. That simply can’t last.
TPC,
Thanks for adding ECRI, I don’t know where they get their #s but the have been fairly accurate. One thing I’ve noticed recently is that the WLI increases are getting smaller and being revised down. On a different subject note the comment on the NASDAQ in the attached link.
http://www.highgrowthstock.com/IanBlog/
It is always worth going into details. These are the last components of OECD leading indicators of the USA.
How would they look like when adding the last two that are ommited?
The previous leading indicator
The leading indicator used until now for the United States in the OECD system was made up of the
following nine series:
1. Housing starts;
2. Money supply M2, CPI-deflated (1975 prices);
3. Treasury bill rate;
4. Share prices (Standard & Poor’s);
5. Net new orders, durable goods;
6. Average weekly claims for unemployment benefit;
7. Changes in crude materials prices and sensitive prices, smoothed;
8. Changes in credit (business and consumption);
9. Net business formation.
The last two series were suspended
Plug in Net business formation (see investment) plug in consumption.
When supranational states organization for impartial studies reach this stage, one has to wonder where is the real truth,what is the real truth?.
Stock markets know better ?
they say that the bond market is usually smarter than the stock market, it sure does not appear that the credit markets are buying the burst in economic acitivity that ECRI is predicting, neither is the dollar.
The last made me do a double take:
“This week’s index was pushed higher largely to stronger housing activity, according to ECRI.”
I dunno if I wanna count on robust housing activity just yet.