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Economy in Brief

ECRI Leading Indicators Signal Economic Expansion
by Tom Moeller February 9, 2004

The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) moved higher through much of January and earlier figures were revised up.

The six-month growth rate of the weekly leading index at 11.5% was near the series' recent high. The double digit growth rates in place since July point toward robust growth ahead.

During the last ten years there has been a 68% correlation between the six-month growth in the leading index and the two quarter growth in real GDP.

Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been a 75% correlation between the y/y percent change in the two series over the last 20 years.

The components of the ECRI weekly leading 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 go to this link.

ECRI Leading Index 01/30/04 01/23/04 Growth Rate 2003 2002 2001
Weekly 132.6 132.8 11.5% 6.6% 1.1% -5.3%
  Jan Dec        
Monthly 132.1 130.5 10.3%      
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