Friday, August 26, 2011

USA Weekly Leading Index Drops to 44-Week Low! (Charts) *Annualized growth rate continues negative*

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ECRI Economic Weekly Leading Index and Annualized Growth Rate
* Updated August 26, 2011 for the week ended August 19, 2011 *


USA Weekly Leading Index

Overview The USA Economic Weekly Leading Index (WLI) dropped -1.0 to a 44-week low of 122.8 (preliminary) for the week ended August 19, 2011. This is the lowest reading since the WLI was 122.1 for the week ended October 15, 2010. This is the largest 2-week drop May 2010, just after the May 6, 2010 Flash Crash in the equity markets. The current Weekly Leading Index was undoubtedly affected by the drop in the equity markets and has a positive correlation with same.

Trend The short-term trend (13-week moving average) continues downwards. The intermediate-term trend (26-week moving average) continues decreasing. The long-term trend (52-week moving average) is now increasing slightly.

Cycle History The recent short-term low is the current reading of 122.8 (preliminary). The recent short-term peak was 131.9 for the week ended April 15, 2011. The Weekly Leading Index reached a Post-Great Recession peak of 134.9 for the week ended April 30, 2010. A Great Recession low of 105.4 was set for the week ended March 6, 2009. 

Weekly Leading Index (Chart) Below is a chart of the ECRI Weekly Leading Index, including the intermediate-term low of 120.3 for the week ended July 9, 2010, through the latest week reported.


USA Annualized Growth Rate

Overview The WLI Annualized Growth Rate (AGR) plunged -2.0% to a 38-week low of -2.1% (preliminary) for the week ended August 19, 2011. This is the lowest reading since the AGR was -2.3% for the week ended November 26, 2010. This is the largest drop since -2.3% for the week ended June 11, 2010. The Annualized Growth Rate had been positive for 34 consecutive weeks before turning negative the past 2 weeks. The AGR has decreased 15 of the past 18 weeks, including decreasing 11 consecutive weeks from April 22 through July 1.

Trend The short-term trend (13-week moving average) continues downwards. The intermediate-term trend (26-week moving average) continues decreasing. The long-term trend (52-week moving average) continues upwards.

Cycle History The recent short-term peak was +8.0% for the week ended April 15, 2011. The recent short-term low is now the -2.1% (preliminary) the week ended August 19, 2011.  The Annualized Growth Rate reached a Post-Great Recession peak of +27.8% for the week ended October 9, 2009. A Great Recession low of -29.8% was set for the week ended December 5, 2008.

Annualized Growth Rate (Chart) Below is a chart of ECRI WLI Annualized Growth Rate, including the intermediate-term low of -10.9% for the week ended July 23, 2010, through the latest week reported. The AGR became negative in early June 2010 and remained negative for 28 consecutive weeks. The AGR was then positive for 34 weeks (from the week ended December 17, 2010 through the week ended August 5, 2011). The AGR has reversed to negative beginning the week ended August 12, 2011.


Commentary Overall, the Weekly Leading Index and Annualized Growth Rate had appeared to be bottom-bouncing recently until strong drops the past 2 weeks. The current Weekly Leading Index at 122.8 (preliminary) is a 44-week low and dismal. The Annualized Growth Rate at -2.1% is a 38-week low and also dismal. Gains previously attained have eroded. The WLI has been below the now distant benchmark 130.00 level for 18 consecutive weeks and the AGR has been the 0.00% benchmark for 2 consecutive weeks after 34 consecutive weeks above. The Weekly Leading Index and Annualized Growth Rate overall continue at levels that indicate future economic growth is becoming questionable. Both the levels and trend are worrisome. Per the ECRI, the Weekly Leading Index projects forward approximately 6 months and the Annualized Growth Rate is relative to the WLI and is a 4-week moving average.


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* Data courtesy of the Economic Cycle Research Institute *

 
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