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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Recovery's Second Wind


Signs are accumulating that the economic recovery may have gotten some renewed vitality in June after pausing in May.

While these hopeful signs come from indicators that are less often in the financial market spotlight, they are generally leading indicators of other market-moving data.

This is a crucial stage in the recovery. Some indicators - most notably retail sales - faltered in May and reawakened concerns that the economic recovery as a whole could be derailed and the feared "double dip" occur.

[T]he Economic Cycle Research Institute's weekly leading index moved up in the second week in June and was 5.6% above its 52-week moving average in the week ended June 14.

"We've seen a lot of the leading indicators strengthening over the last several weeks, pointing to stronger economic activity in the second half of the year," said Lakshman Achuthan, managing director at ECRI. "The Journal of Commerce commodity price index has been up strongly for eight weeks, suggesting a building industrial sector." And Lakshman sees hopeful signs for one of the most closely watched economic indicators.

"Through May, the growth rate of our leading indicator of employment hit a five-year high."

The widely-expected pickup in the second half of the year - which begins in a little over a week - appears to be on track.