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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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WLI Falls


The Economic Cycle Research Institute’s weekly index of leading economic indicators continues to trot in the wrong direction, down.

The ECRI’s index ticked lower last week, the institute said today, and the four-week rolling average fell to -7.1%, the worst rate of decline in nearly a year. The chart keeps looking uglier and uglier, though you could eyeball it and say maybe it has stopped falling quite so hard. Second derivative green shoots?

Anyway, the index is still not signaling a recession — it has fallen much further than this in past recessions, and even fell more than during last year’s double-dip scare, when growth actually held up OK.

But it continues to defy any expectations of a quick economic rebound in the near future.