Posted on 05/12/2012 2:08:35 PM PDT by blam
ECRI Update: Reaffirming The Recession Call ... Again
Advisor Perspectives (dshort.com)
By Doug Short
March 11, 2012
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.1 as reported in today's public release of the data through May 4. This is essentially unchanged from last week. However, the underlying WLI again rose fractionally from an adjusted 124.6 to 125.4 (see the fourth chart below).
ECRI Reaffirms it's the Recession Call ... Again
The big news this week, however, is not the weekly data update but ECRI's latest reaffirmation of its recession call in a Bloomberg interview with ECRI's Lakshman Achuthan earlier this week. I've embedded a link to the nine-minute video on the Bloomberg website.
Two of Achuthan's key points in in the interview are that year-over-year jobs growth is falling and real personal incomes, year-over-year, are at recessionary levels. To illustrate the second point, here is a chart of Real Personal Incomes, year-over-year, since the BEA began tracking this data in 1959.
As we can readily see, the current reading is lower than the onset of the eight recessions since 1959. However, there were other months when the YoY number fell to or below the current level from a much higher level when no recession occured: 1993, 1994 and 2005. As a recession indicator this data series is worrying, but not necessarily conclusive.
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