ECRI Leading Indicators Levels Now Flashing Red
We have been watching the change in the ECRI Leading indicators as a predictor of economic activity. I have posted a few times on this, first in April, then again last month. All along the way, it has been the rate of change in the ECRI’s weekly leading indicators, not the change of the index. This week’s numbers were not good, with the index falling to 123.2, a decline of 3.5%.
Barron’s writes:
The Institute’s Lakshman Achuthan, however, remarked that “While the plunge in WLI growth to a one-year low assures a significant slowing in U.S. economic growth in the coming months, the recent weakness has not lasted long enough to signal a new recession threat.”
Right now, the index points to slowing growth, not recession. But Achuthan notes that year-over-year change is now negative for the first time since recovery began. I see this as a red flag for policy makers.
Source: ECRI Leading Indicators Drop, But No Double-Dip Yet – Barron’s
About Edward Harrison
Data-ranges contravene rates-of-change data. Contrary to economic theory (esp. Dr. Milton Friedman), monetary lags are all exactly the same length. Economic forecasts are mathematically infallible.