ECRI GROWTH CONTINUES TO DECLINE
18 June 2010 by Cullen Roche
7 Comments
The negative trend in the ECRI’s weekly leading index continued this week. The annual growth rate for their leading index declined to -5.7% for the week ending June 11th. This was down from -3.7% last week. This is just the second negative reading since the ECRI began calling for an economic recovery early in 2009. Lakshman Achuthan, ECRI’s managing director is not yet concerned about the decline in the leading index:
“Despite the WLI’s rapid drop over the last six weeks, its downturn has not been sustained enough to signal an imminent recession.”
Source: ECRI
This is interesting but what’s the expectations ratio doing lately?
Lakshman is always very careful about his recession calls, which is why his record is nearly perfect. So to say he’s not worried because he’s not yet calling for a recession, is nonsense. It is clearly signaling a downturn in economic activity in the next few months, if not quite a recession. If it turns around next week, then maybe we’re only going to have a growth rate slowdown. But this is exactly as bad as it looks, the swings we are witnessing are incredibly violent.
Lakshman has a perfect record of calling recessions way too late to be of use to anyone. So what good is it to have him keep a chart of the LEI if he is not going to use it. He is as useless as Moody and Fitch rating agenies.
“imminent” is the operative word in Laks’ latest weekly nonsense. He knows the ship is going down, but doesn’t want to anger the PPT by saying so too soon.
A question. Perhaps the author or someone else could explain this to me:
TPC keeps talking about the “annual growth rate for their leading index”, which this week was quoted as -5.7%. Well, if you look at the ECRI WLI data, this week the index value was 122.5 and a year ago was 117.3. By what logic is that described as an annual growth rate of -5.7%?
Reuters reports the ECRI data, along with accompanying pithy quotes from Laks, weekly. The actual ECRI data (both WLI and WLI growth rate) can be found on ECRI’s website home page. Historical data is in the Excel spread sheets linked on the homepage (they seem passord protected at first, but can be easily accessed). See:
http://www.businesscycle.com/resources/
TPC can probably explain WLI growth rate better, but I believe it is the rate of change of the WLI index.
No, it’s not the rate of change in the WLI. That’s what I was saying. The change from 117.3 a year ago to 122.5 now, is clearly not -5.7%.
So, if it’s not the rate of change in the WLI, should TPC be saying things like:
“The annual growth rate for their leading index declined to -5.7% for the week ending June 11th.”?
If “WLI” is “their leading index”, then his statement is factually incorrect.