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Economic Data Continues to Refute ECRI's Recession Call

August 24, 2012

As of today, the ECRI website still features Lakshman Achuthan's July 10th Bloomberg TV interview, in which he reaffirmed his company's recession call and stated that we're already in a recession.

-Doug Short, vice president of research, Advisor Perspectives

The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) rose slightly to 123.3 from last week's 123.0 (an upward revision from 122.8). See the WLI chart below. The WLI growth indicator (WLIg) is at -0.1, less negative than the -0.4 for last week, which is an upward revision from the previously reported -0.6.

As of today, the ECRI website still features Lakshman Achuthan's July 10th Bloomberg TV interview, in which he reaffirmed his company's recession call and stated that we're already in a recession (link to video).

A cornerstone of his argument is that four key indicators used by the NBER to make official recession calls are, as he put it, "rolling over." Here are the four indicators in question. Only one, real retail sales (which is the most volatile of the lot) had been showing signs contraction but subsequently improved in the July data. The next of the Big Four will be Real Income (less transfer payments), due out the day before ECRI's next update.

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