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Economy in Brief

ECRI U.S. Leading Index Moved Up
by Tom Moeller November 22, 2004

The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose last week for the fourth period in the last five. The 0.4% w/w rise eased the decline in the index's smoothed six-month growth rate to -0.7% from -1.6% late last month.

Successive positive growth in the weekly index as recently tallied occurred last this past March after which the index's forward momentum eased, foreshadowing a slowdown in real GDP growth into the 3-4% range from the 4-7% range.

Past recessionary periods in the US economy were signaled by negative growth in the ECRI Leading Index in the -5 to -10% range. During the last ten years there has been a 69% correlation between the six-month growth in the ECRI leading index of the US economy and two quarter growth in real GDP.

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 ECRI Leading Index's recent pattern generally mirrors the Conference Board's Index of Leading Economic Indicators, with a slight lead. Construction of the ECRI Leading Index differs from the Conference Board Index but there has been a 70% correlation between the y/y percent change in the two series over the last 10 years.

The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months.

The latest from ECRI is available here.

ECRI Leading Index 11/12/04 11/05/04 Growth Rate 2003 2002 2001
Weekly 132.7 132.2 -0.7% 6.5% 1.1% -5.3%
  Oct Sept        
Monthly 131.2 131.7 -1.2%      
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