A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Weekly Leading Index Falls

A gauge of future U.S. economic growth fell to its lowest level in five years and its annualized growth rate also declined, a sign that growth should still be a bigger concern than inflation for policy-makers, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 127.5 in the week to Aug. 1 from 128.1 in the previous period.

The decline in the index -- to its lowest since 127.3 hit in the week to Aug. 15, 2003... Lakshman Achuthan, managing director at ECRI, said in an instant message interview.

"With the WLI falling to a fresh five-year low, a business cycle upturn looks increasingly distant," he wrote.

The index's annualized growth rate slipped to a 15-week low of negative 8.9 percent from minus 7.6 percent.

"While monetary policy makers would like to raise rates they can't, because the recession is not yet drawing to a close," Achuthan added. "So even as the Fed may continue to roar on the inflation front, it remains a paper tiger."