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Economy in Brief

ECRI Leading Index Flat During 2006
by Tom Moeller July 24, 2006

The weekly leading index of the US economy published by the Economic Cycle Research Institute (ECRI) was unchanged in the latest week, a performance which typifies the index's movement during 2006.

Versus its year end 2005 level, the leaders are up a scant 0.8% while the six month growth rate of 0.3% is down from this year's high of 4.8%.

During the last ten years there has been a 53% correlation between the change in the weekly leading index and US real GDP growth during the following quarter. The correlation has risen to 71% during the last five years.

The slowdown mirrors the pattern of slower growth in the leading series of the US economy from the Conference Board and the OECD. Reduced economic liquidity as suggested by a flat interest rate yield curve and slower growth in the money supply, as well as lower housing market activity, account for much of the slowdowns.

Real GDP growth for the U.S. in 2Q is scheduled for release this coming Friday and it is generally expected at 3.0% (AR) versus 5.6% growth during 1Q.

Residential Investment over the Real Estate Cycle from the Federal Reserve Bank of San Francisco is available here.

The daily liquidity effect from the Federal Reserve bank of St. Louis can be found here.

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

Economic Cycle Research Institute  7/14/06 12/30/05 Y/Y 2005 2004 2003
Weekly Leading Index 136.9 135.8 1.6% 134.6 132.6 124.9
   6 Month Growth Rate 0.3% 1.5%   1.9% 4.2% 6.7%
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