10 February 2017: ECRI’s WLI Growth Index Moderately Declines

ECRI’s WLI Growth Index which forecasts economic growth six months forward remains in positive territory for the 47th week – after spending the previous 35 consecutive weeks in negative territory. This is compared to RecessionAlerts similar weekly leading index. ECRI released their coincident and lagging indices this week and is discussed below.

Current ECRI WLI Level and Growth Index:

Here is this week’s update on ECRI’s Weekly Leading Index (note – a positive number indicates growth):

U.S. WLI Decreased

The U.S. Weekly Leading Index (WLI) decreased to 144.5 from 145.5. The growth rate ticked down to 11.1% from 11.7%.

To put the economy in perspective please see links below:

– listen to Lakshman Achuthan’s recent interview on Finanacial Sense.

– watch Lakshman Achuthan’s interview on MSNBC.

– read ECRI’s “Future Inflation Gauge Leads Inflation Expectations“.

For a closer look at recent moves in the U.S. Weekly Leading Index, see the chart below:

Comparison to RecessionAlert Weekly Indicator

RecessionAlert also produces a weekly foreward indicator using different pulse points tha ECRI’s WLI. Here is a graph from dshort.com which compares the two indices. Both indices are showing nearly the same rate of growth.

Coincident Index:

ECRI produces a monthly coincident index – a positive number shows economic expansion. The January index value (issued in February) shows the rate of economic growth unchanged.

z ecri_coin.png

ECRI produces a monthly inflation index – a positive number shows increasing inflation pressure.

U.S. Future Inflation Gauge:

z ecri_infl.PNG

Future Inflation Gauge Leads Inflation Expectations

ECRI’s U.S. Future Inflation Gauge (USFIG) turned up ahead of inflation expectations, and remains in a cyclical upturn.

The chart shows that the USFIG (red line at the top) was already in a strong upturn last July, so even though market inflation expectations (blue line at the bottom) was way down, we knew that a major upshift in the inflation cycle was at hand.

Of course, since then, inflation expectations have risen significantly.

Since the summer we have had a U.S. inflation upturn call, and a global reflation call, based on 11 international FIGs (see presentation slides).

Combining that with our earlier growth rate cycle upturn call for the U.S., it’s clear that, on a cyclical basis, we are at a very different place than a year ago.

ECRI produces a monthly Lagging index. The January economy’s rate of growth (released in February) showed the rate of growth declined..

U.S. Lagging Index:

z ecri_lag.PNG

source: ECRI

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