Saturday, September 4, 2010

USA Weekly Leading Index Dips To 6-Week Low (Charts, Video) "No re-acceleration of growth on the horizon"

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Weekly Leading Index: Is the USA Economy Bottom Bouncing?


USA Economic Weekly Leading Index Dips To 6 Week Low

The USA Economic Weekly Leading Index dipped to a 6 week low of 120.6 for the week ended August 27, 2010. The lowest the WLI has been in 2010 was 120.4 for the week ended July 16. The highest was 134.7 at April 30.

Below is a chart of the latest 52 weeks (1 year) of the ECRI Weekly Leading Index, from the week ended September 4, 2009 through the latest week reported, August 27, 2010. As can be seen, the WLI peaked in late April 2010, declined significantly, and now appears to be bottom bouncing. Concomitant with this WLI decline has been the GDP growth slowing, as reviewed and charted here, in the previous post, "USA Q2 GDP Revised Downward to 1.6% (Chart)".

The 13-week, 26-week, and 52-week moving averages of the WLI are 121.2, 125.9, and 127.6, respectively. The current WLI of 120.6 is below all 3 of these moving averages. The WLI peaked at 134.7, for the week ended April 30, 2010. The plunge seen on the chart below then occurred.


*Data courtesy of ECRI*


USA WLI Annualized Growth Rate Drops to -10.1%

The WLI annualized growth rate fell to -10.1%. The 2010 annualized growth rate low point was -11.0% for the week ended July 23 and the high point was +23.0% for the week ended January 1.

Below is a chart of the latest 52 weeks (1 year) of the ECRI WLI Annualized Growth Rate, from  the week ended September 4, 2009 through the latest  week reported, August 27, 2010. As can be seen, the annualized growth rate peaked at +27.8% in early October 2009 and began a decline with intermittent leveling off. A negative growth % was reached in early June 2010 and the rate has remained negative since.



*Data courtesy of ECRI*


Lakshman Achuthan (ECRI) on the Weekly Leading Index: Where is the USA Economy Headed

Lakshman Archuthan discusses the latest Weekly Leading Index and Annualized Growth Rate % and what this means for the future of the USA economy. Mr. Archuthan says the negative -10.1% annualized growth rate indicates "there is no re-acceleration of economic growth on the horizon, for about a couple of quarters". The indicators look ahead a couple of quarters and the growth rate of the economy and when it is peaking and when it is troughing.

Is a double-dip recession imminent? Archuthan says to not only look at the Annualized Growth Rate of -10.1% but to look at the level of the Weekly Leading Index, which is at 120.6. The WLI has been flat in July and August, but is failing to show a persistent decline, which would indicate double-dip. Therefore, "that is why were are not making a new recession forecast." "We are in a recovery". However, he states we are in decelerating jobs growth which will "disappoint a lot of people" and which "will be a problem".

(Wall Street Journal, September 3, 2010) Kelly Evans talks to Lakshman Achuthan, Managing Director at Economic Cycle Research Institute, about today's employment report and his outlook for the U.S. economy. ECRI's Lakshman Archuthan discusses the latest Weekly Leading Index data. The discussion addresses some of the misunderstanding about how the growth rate of the index relates to its level.





Links
USA Unemployment Rate Edges Up To 9.6% In August (Charts) Boom Doom Economy
USA Manufacturing PMI Expands in August +0.8% (Chart) Boom Doom Economy
USA Monthly Leading Economic Index: Double Dip Recession or Bottom Bouncing? (Chart) Boom Doom Economy
USA Q2 GDP Revised Downward to 1.6% (Chart) Boom Doom Economy
S&P 500: Another Death Cross Arrives (Charts) Matrix Markets
Fed Chair Bernanke: Pace of Economic Recovery Has Slowed Somewhat (Review) Financial Controls
Fed Chair Bernanke: Moderate Recovery, Outlook "Unusually Uncertain" (Review) Financial Controls
Economic Cycle Research Institute ECRI


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