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Economy in Brief

ECRI Leading Economic Index Improved Slightly
by Tom Moeller July 18, 2005

Though the level of the leading index of the US economy published by the Economic Cycle Research Institute (ECRI) fell in the latest week, the 0.7% decline was not enough to undo the modest improvement in the leaders since late May. Since then index's six month growth rate has risen to 1.2% from -0.3%.

During the last ten years there has been a 54% correlation between the change in the weekly leading index and the change in US real GDP growth during the following quarter. The correlation has risen to 67% during the last five years.

While growth in the leaders is down sharply from double digit rates logged during 2003, recession is not indicated. Negative growth in excess of -4% typically preceded past U.S. recessions.

Moreover, slower economic growth may not even be indicated by the more than 10 percentage point drop in the leaders' growth. During both the late 1980s and the late 1990s the leaders slowed by an even greater degree and little slowing in real GDP occurred.

Visit the Economic Cycle Research Institute for analysis of US and international business cycles.

Economic Cycle Research Institute  07/08/05 12/31/04 Y/Y 2004 2003 2002
Weekly Leading Index 133.5 132.4 1.6% 132.6 124.9 119.8
   6 Month Growth Rate 1.2% 1.4%   4.2% 6.7% 1.1%
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