ECRI's Leading Indicators in Recession Territory

Thursday, July 17, 2008 | 11:45 AM

The Leading Economic Indicators (LEIs) have not been are not my favorite of all data points.

Long term readers may recall my ire over the way the Conference Bureau tweaked the calculating of the Leading Economic Indicators' in terms of the yield curve in order to make them more bullish. Hence, why I look at them somewhat askance (NT's Paul Kasriel has convinced me this is a hasty opinion on my part).

Rather than rely on the Conference Board's Juiced Data, we can turn instead to the Economic Cycle Research Institute (ECRI) data leading indicators. Their indicators have a very good track record of forecasting recessions.

Leading Economic Indicators Index in Recession Territory
click for jumbo chart

Chart courtesy of Lakshman Achuthan, ECRI 


The ECRI’s weekly leading economic index is now deep into the territory associated with recessions. Its down over 10% this month, and this week is running down 8% on a year-over-year basis. As the chart above shows, that is something that only happens when the economy is in recession.


Juiced Data (August 2005)

Mis-Leading Economic Indicators (August 2005)


Thursday, July 17, 2008 | 11:45 AM | Permalink | Comments (18) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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As the world crumbled around him, Achuthan remained resolute that first we weren't in a recession and second a stimulus could save us from recession. Until this cycle I had a reasonable respect for ECRI but constant remarks clearly showing a complete lack of understanding of economics and a slavery to their doodad showed me he needs to go back to school and unlearn economics. Now that banks are down 90%, they are calling a recession. Useful to a business maybe. To investors?

Posted by: bdg123 | Jul 17, 2008 11:55:22 AM

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