ECRI: THE RECOVERY IS FAR FROM FRAGILE
The ECRI continues to believe the recovery is going to be quite robust. From the ECRI:
A weekly gauge of future U.S. economic growth climbed higher in the latest week, while its yearly growth rate reached a new all-time high, reaffirming projections of a brisk, uninterrupted recovery.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to a 60-week high of 127.8 in the week to Sept. 18 from an downwardly revised 126.1 the previous week, which was originally reported as 126.2.
It was the highest WLI reading since July 25, 2008, when it also stood at 127.8.
The index’s yearly growth rate rose to a fresh record high of 24.3 percent from last week’s high of 22.9 percent.
Last week, ECRI Managing Director Lakshman Achuthan told Reuters that the group expects an “unstoppable” recovery with “no relevant roadblocks.” Fears over mounting unemployment, debt-laden consumers, and dips in recovery are typical of recessionary times, he said.
“With WLI growth climbing to a fresh record high, the economic recovery is far from fragile,” Achuthan said on
Friday.The index rose in the latest week because of stronger housing activity, ECRI said.
Source: ECRI
The WLI is the highest its been since July, 2008….just before everything started crashing.
Are these numbers skewed by stimulus or is there something real here. I can’t believe this is similar to previous recessions.
Sept 11th ECRI director:
“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.”
The ECRI data looks like it has a very high correlation with the stock market. If anyone else has thoughts on it they might know the components better than I, but I assume stocks are a large component of their index.
Is this guy (Lakshman Achuthan) for real? An “unstoppable recovery with no relevant roadblocks.” Independent forecasting group; give me a break. I’ll take the other side of this trade any day of the week.
Found statistical analysis of the WLI and S&P going back to 2001 – though not familiar with source (cxoadvisory).
“In contrast, the correlation between the weekly change in WLI and the change in the S&P 500 index during the four weeks prior to WLI release is 0.33, again suggesting that WLI lags rather than leads the stock market.”
http://www.cxoadvisory.com/blog/internal/blog4-09-09/