Written by Steven Hansen
The New York Fed’s Weekly Leading Index (WLI) continued its steep decline, and now shows an economy that is significantly worse than seen during the Great Recession.
Analyst Opinion of the Weekly Leading Index
This data set should be considered a high-frequency coincident indicator on a par with the Aruoba-Diebold-Scotti Business Conditions Index produced by the Philly Fed – and both show conditions are already worse than the Great Recession.
The current situation according to the New York Fed:
- The WEI is currently -11.70 percent, scaled to four-quarter GDP growth, for the week ending April 18 and -10.40 percent for April 11; for reference, the WEI stood at 1.58 percent for the week ending February 29.
- Today’s decline in the WEI was driven by a fifth successive week of initial unemployment insurance (UI) claims in the millions (4.27 million, not seasonally adjusted), a considerable fall in federal tax withholdings (now negative year-on-year), and a further modest decrease in rail traffic. These factors offset a small increase in fuel sales. The slight upward revision of the April 11 number resulted from the continuing UI claims release providing a slightly less negative signal than before.
Comparision to the Aruoba-Diebold-Scotti Business Conditions Index
Components of the Aruoba-Diebold-Scotti Business Conditions Index
The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high observation frequency. Its underlying (seasonally adjusted) economic indicators (weekly initial jobless claims; monthly payroll employment, monthly industrial production, monthly real personal income less transfer payments, monthly real manufacturing and trade sales; and quarterly real GDP) blend high-frequency and low-frequency data. The ADS index on this web page is updated in real time as new or revised data on the index’s underlying components are released. Hence at the time of any ADS update, the index is based on all information on all indicators available at that time.
The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions noticeably worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.
source: New York Fed
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