Written by Steven Hansen
The New York Fed’s Weekly Leading Index (WLI) continues to decline and continues to show 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 caused by the coronavirus pandemic are already worse than the Great Recession. Simply the economy is in a recession and is still worsening.
The WEI is an index of ten daily and weekly indicators of real economic activity scaled to align with the four-quarter GDP growth rate.
The current situation according to the New York Fed:
- The WEI is currently -12.00 percent, scaled to four-quarter GDP growth, for the week ended May 9 and -11.14 percent for May 2; for reference, the WEI stood at 1.58 percent for the week ended February 29.
- Today’s decline in the WEI for the week of May 9 is a result of the weight placed on past values of the WEI in updates based on partial data. This persistence outweighed modest recoveries in retail sales, consumer confidence, and steel production. The WEI for the week of May 2 was revised upward after today’s release of the staffing index was less negative than previous data.
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
include(“/home/aleta/public_html/files/ad_openx.htm”); ?>
