ECRI: Yo-Yo Years - Picture

Date: Thu, 22 Mar 2012 17:23:13 +0000

Subject: ECRI: Yo-Yo Years.

ECRI: Yo-Yo Years.

Thanks. The next time the Yo-Yo wouldn't come back up. Let us see how many people get sucked in when the market makes a new low. The Feds have used up all their ammunition to prop up the economy.
Jas

• Mar 16 WLI Rises To 31-Week High; ECRI Sticks To Recession Call
• Mar 13 U.S. Budget Deficit Rises Another $4,088 Per Worker 
• Mar 9 ECRI's Weekly Leading Index Keeps Climbing - Will Recession Call Hold? 
• Mar 2 ECRI Sticks To Recession Call As Weekly Leading Index Continues To Climb

ECRI's WLI and WLI Growth Rate Both Up

The Economic Cycle Research Institute, ECRI - a New York-based independent forecasting group, released their latest readings for their proprietary Weekly Leading Index (WLI) this morning. (More about ECRI)

For the week ending July 30, 2010

• WLI  stood at 121.8, up from the prior weeks revised (higher) reading of 121.0.  The lowest reading for WLI this year was 120.6 for the week ending July 2 and 16.
• WLI growth turned higher to minus 10.3 percent from minus 10.7 percent a week ago.  This is the first higher weekly reading for WLI growth since it stood at 13.6 on March 19, 2010.

Chart of WLI and WLI growth vs GDP Growth

Click to view full size chart

Since ECRI releases their WLI numbers for the prior week and the stock market is known in real time, you can often get a clue for next week's WLI from the weekly change in the stock market. 

Chart of WLI vs S&P500

 Click to view full size chart

Notes: 

1. The WLI for the week ending 8/6/10 will be released on 8/13/10.
2. Occasionally the WLI level and growth rate can move in different directions, because the latter is derived from a four-week moving average.

Before you claim understanding of ECRI's WLI, make sure you read the article  "ECRI Weekly Leading Indicators Widely Misunderstood."

"Bottom line, neither the “experts” predicting that the sky is falling based on the WLI, nor the other “experts” indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about...  A slowdown in U.S. economic growth is imminent, but a new recession is not." 

Disclosure:  I am long SPY (charts & quote) in my personal account and in the "Explore Portfolio" in  "Kirk Lindstrom's Investment Letter."

WLI Further Confirms That Economy Has Been In Recession & Indicates Depression Ahead

Note this is an email from Jas Jain.

-------- Original Message --------
Subject: ECRI’s WLI Further Confirms That Economy Has Been In Recession & Indicates Depression Ahead
Date: Fri, 1 Feb 2008 10:41:01 -0800
From: Jas Jain

February 01,2008

ECRI’s WLI Further Confirms That Economy Has Been In Recession & Indicates Depression Ahead

JB: “The ECRI Weekly Leading Index (WLI) fell to 131.1 for the week ending January 25 from a downwardly revised 135.7 (previously 135.8). The smoothed, annualized growth rate, however, decreased to -7.1% from an unrevised -6.1%. This ends two straight weeks of improvement for the growth rate.”

The CRASH in WLI level to 131.1 from 135.7 is not just another confirmation that the economy has already been in recession but the first confirmation of my forecast of this recession sliding easily into a depression. How so? It is a growing series and it is back to where it was 50 months ago. This behavior was last seen between 1970-1982, a period of very bad recessions and deep recessions. In 2001, it was seen in September when the economy was already in recession for 6 months (the worst of WLI is always seen after the recession and during the early period of a recovery!). Tells you how leading the indicator really is; as a matter of fact, it has been turned into a lagging indicator by back-adjusting (or back-testing)!

Once and for all, Lakshman Achuthan of ECRI would be proven to be a bubble-meister and a propagandist and not a scientist. Dismal science has a lot to do with human behavior of economists and not due to anything inherent. Most of the economists that have access to the public via MSM are employed by businesses for the purpose of propaganda, e.g., NAR and CAR.

Never look to an economist for the forecast of recessions and depressions!

Jas

ECRI has not called for a recession yet, but Jas Jain has been calling for a depression for a decade.

See

• ECRI WLI Falls to a 6-year Low. The WLI fell due to higher jobless claims, weaker housing activity and lower stock prices, said Lakshman Achuthan, managing director at ECRI. "WLI growth has dropped back to the six-year low seen in early January," Achuthan said. "While the economy and employment did continue to grow through the end of 2007, the window of opportunity to avert a U.S. recession is about to slam shut."
  
• ECRI Says There Is A Window of Opportunity for the US Economy

==> High CD Yields with FDIC <==

Confusing Weekly Data with Long Term Predictions

Today's email from Jas Jain is critical of ECRI ( The Economic Cycle Research Institute), a New York-based independent forecasting group. Jas seems to have trouble distinguishing between comments on weekly changes and long term forecasts.

-------- Original Message --------
Subject: ECRI’s Unrelenting Mantra of “stronger housing activity” During 07/06/07-11/16/07
Date: Fri, 28 Dec 2007
From: Jas Jain

ECRI’s Unrelenting Mantra of “stronger housing activity” During 07/06/07-11/16/07

Nov 16, 2007: “The effect of higher rates and jobless claims was partially offset by stronger housing activity and higher stock prices, said Lakshman Achuthan, managing director at ECRI.”

"NEW YORK, Sept 14 (Reuters) - A weekly gauge of future U.S. economic growth edged up due to higher stock prices, lower interest rates and stronger housing activity..."

"NEW YORK, Aug 10 (Reuters)...The fall in the index was partly offset by stronger housing activity, Achuthan said."

“NEW YORK, July 13 (Reuters) - A gauge of future U.S. economic growth rose in the latest week due to measures of stronger housing activity, lower jobless claims and higher stock prices…”

“NEW YORK, July 6 (Reuters) - A gauge of future U.S. economic growth edged up in the latest week due to lower interest rates and stronger housing activity…”

Talk about clueless economists, or dismal scientists. Where they blind to the reality or were they purposely misleading the public?

Jas

It is clear to me ECRI was commenting on what changed over the prior week that caused the weekly index to go up or down. Sadly, this seems completely lost on Jas Jain who has been wrong predicting a depression for the last decade while ECRI has been correct with its predictions on recessions for nearly 20 years that I have data for.

ECRI WLI Growth Rate Falls to Negative 5.2%

Today Jas Jain once again rings the recession bell while being critical of ECRI for saying a recession is still not inevitable.

-------- Original Message --------
Subject: ECRI’s WLI Growth Rate, -5.2%, Falls In the ECRI’s Recession Range of –5% to –6%
Date: Fri, 28 Dec 2007
From: Jas Jain

December 28, 2007 : ECRI’s WLI Growth Rate, -5.2%, Falls In the ECRI’s Recession Range of –5% to –6%

December 24, 2007 press release from ECRI: “The ECRI leading U.S. index's growth rate has hit a 5-year low of -4.8%. Typically a -5% to -6% reading is needed for a recession.”

Latest Data (December 28, 2007):

Weekly Leading Index 135.2 -5.2

So, “the ECRI leading U.S. index's growth rate” has fallen below 5%. One wonders why the ECRI econ-meisters are not issuing the recession forecast now that the data is screaming recession. My analysis of the long-term behavior of the WLI confirms a recession that will end up in depression.

Jas

Jas, obviously there is more to their forecast than the raw numbers. Here is the ECRI press release from today.

Weekly Leading Index Falls (but no recession call)

NEW YORK, Dec 28 (Reuters) - A weekly gauge of future U.S. economic growth fell due to higher jobless claims and lower stock prices, as its annualized growth rate hit a five-year low, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 135.2 in the week of Dec. 21 from 136.2 in the prior week.

The negative effect of higher claims for unemployment benefits and weaker equities was partially offset by lower interest rates, said Lakshman Achuthan, managing director at ECRI.

WLI annualized growth rate fell to minus 5.2 percent from minus 4.8 percent. It was last that low on Nov. 1, 2002, according to ECRI data.

"With Weekly Leading Index growth fast approaching its worst reading since the 2001 recession, the U.S. growth outlook continues to deteriorate. Nevertheless, it is still premature to predict a recession," Achuthan said.

Jas, you should join our facebook ECRI forum so you can ask questions of Lakshman directly. You have to admit ECRI has been accurate while you have not with your constant calls for a depression.

Request Invitation to FREE facebook discussion group "Investing for the Long Term."