ECRI Weekly Leading Indicators at Negative 9.8; Has the ECRI Blown Yet Another Recession Call?
Inquiring minds have been watching the ECRI’s weekly leading index plunge nonstop since October of 2009. Moreover the WLI has been in negative territory for 6 consecutive weeks.
click on chart for sharper image
Is that a recession call by the ECRI?
Absolutely not, at least as of June 14, according to Lakshman Achuthan managing director of ECRI who blasted the Wall Street Journal for misleading reporting.
The Business Insider discusses the situation in Why Last Week’s Collapsing ECRI Leading Indicator WASN’T A Recession Signal.
Following the Business Insider link back one step takes us to Jeff Miller’s “A Dash of Insight” Weighing the Week Ahead: Negativity Prevails where I see that I was cited along with the Wall Street Journal, Zero Hedge, the Pragmatic Capitalist, and the Financial Times for incorrect intrepretation of the WLI.
Miller quoting a comment in response to the Wall Street Journal article writes…
Meanwhile, in the comments there was a stern rebuke. Lakshman Achuthan wrote:
While we certainly appreciate the attention given to our Weekly Leading Index, I’d like to clarify a few points raised in the article. First, according to the Economist magazine, “the ECRI” has not ever given false alarms on a recession forecast. http://www.businesscycle.com/about/testimonials/The purported false alarms from “the ECRI” mentioned in this article come from a mistaken and simplistic view that negative growth in ECRI’s Weekly Leading Index (WLI) is tantamount to a recession forecast. In fact, since 1983, cyclical downturns have taken WLI growth under the zero line a dozen times, but recessions have followed on only three of those occasions – times when ECRI actually made a recession forecast.
Since ECRI itself has never used WLI growth going negative as a recession signal, it is important that such “false alarms” are attributed not to ECRI or even to the WLI, but to what is a mistaken interpretation of the WLI
Related Articles:
- Recession Redux?
- ECRI Weekly Leading Indicators at Negative 6.9; How Likely is a Double Dip?
- ECRI Weekly Leading Indicators Turn Negative
- ECRI Leading Indicators Dip Again; Is a Double-Dip Recession Coming?
- The index of leading indicators in Canada rose by 0,8%
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