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The Leading Index of the US economy published by the Economic Cycle
Research Institute (ECRI) rose 1.5% last month, more than recovering the
prior two month's declines.
· At the end of last month, the level of the weekly leading index was up to its highest level since July. The indicator's six-month growth rate rose to -1.8% versus -4.5% hit in October.
· Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
· The components of the index are money supply plus stock & bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
· The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy's growth rate.
· For more on ECRI and the Weekly Leading Index click here.