Friday, October 1, 2010

USA Weekly Leading Index at 2 Week High (Charts) "Suggests recovery will remain sluggish"

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Weekly Economic Leading Index: Is the USA Economy Bottom Bouncing?


USA Economic Weekly Leading Index Above 122 for 4 Weeks

Overview The USA Economic Weekly Leading Index (WLI) was +0.3 at 122.5 for the week ended September 24, 2010. This is the fourth consecutive week the WLI has held above 122.

Cycle History The WLI for the week ended September 24 is down -12.2 and -9.1% from the peak of 134.7 for the week ended April 3, 2010. The current WLI is up +2.1 and +1.7% from the bottom of 120.4 for the week ended July 16, 2010. Therefore, the current WLI of 122.5 is closer to the cyclical trough than peak.

Trend The WLI of 122.5 is above the 13-week moving average of 121.3 for the fourth consecutive week. The WLI continues below the 26-week moving average of 124.5 for the 20th consecutive week. The WLI continues below the 52-week moving average of 127.2.

Chart (Weekly Leading Index) Below is a chart of the latest 52 weeks (1 year) of the ECRI Weekly Leading Index, from the week ended October 2, 2009 through the latest week reported, September 24, 2010. As can be seen, the WLI peaked in late April 2010, declined significantly, and now appears to be bottom bouncing without trend. Concomitant with the WLI decline this summer has been USA GDP growth being revised downwards for the second half of 2010.



USA WLI Annualized Growth Rate at 14 Week High

Overview The WLI Annualized Growth Rate (AGR) was -7.8% for the week ended September 24, 2010, a 14 week high, the fourth consecutive weekly increase, and a rise of an impressive +0.9.

Cycle History The AGR for the week ended September 24 is down -35.6 and -128.1% from the peak of +27.8% for the week ended October 9, 20009. The current AGR is up +3.2 and +29.1% from the bottom of -11.0% for the week ended July 23, 2010. Therefore, the current AGR of -7.8% is closer  to the cyclical trough than peak.

Trend The AGR is in an uptrend, has increased for four consecutive weeks, and increased 8 of the last 9 weeks. This was after 12 consecutive weekly declines from the week ended May 7, 2010 to the week ended July 23, 2010.

Chart (Annualized Growth Rate) Below is a chart of the latest 52 weeks (1 year) of the ECRI WLI Annualized Growth Rate, from the week ended October 2, 2009 through the latest week reported, September 24, 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.



Commentary The Weekly Leading Index projects forward approximately 6 months and the Annualized Growth Rate is relative to the WLI. That is, the overall higher WLI in 2010 mitigates some of the recently negative AGR. The WLI is off the bottom reached in mid-July. The AGR is also off the bottom reached in late July and has recently uptrended. While the data has not been indicative of a robust USA economic recovery, and actually were dismal at the bottom, the recent uptrend is encouraging. "After a brief plunge in the late spring, the WLI has been fairly stable throughout the summer and into September, suggesting that it is still premature to predict a new recession," said Lakshman Achuthan, managing director of ECRI. The WLI is "at a level that suggests the recovery will remain sluggish".


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Other Links
Economic Cycle Research Institute ECRI
*Data courtesy of the Economic Cycle Research Institute*


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