Chart courtesy of ECRI
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As the chart above reveals, ECRI’s leading indicators are deep into recession territory. Not only are they weekly measures at the lowest levels in 5 years, but the annualized drop is the biggest in 28 years.
Reuters:
"The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 125.9 in the week to Aug. 15 from 126.4 in the previous period. Its annualized growth fell to negative 11.4 percent from minus 10.7 percent, revised up from minus 10.8 percent. It hit its lowest mark since the week to June 13, 1980, when it was negative 11.8 percent.
The index declined to its lowest since July 2003 due to lower stock prices and housing activity, and the fall was partly offset by lower interest rates and jobless claims, said in an instant message interview Lakshman Achuthan, managing director at ECRI.
"Last year WLI growth fell to its worst reading since the 2001 recession, and today it has plunged to a 28-year low, its worst reading since the 1980 recession," he wrote. "This makes it crystal clear that there is no business cycle upturn in sight."
It is getting increasingly difficult for event he most polyannish permabull to claim — at least within a straight face — that there is no US recession.
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Sources:
Weekly Leading Index (WLI) Press Release
ECRI
Friday, August 22, 2008
US yearly growth gauge drop biggest in 28 yrs-ECRI
Rodrigo Campos
Reuters, Aug 22, 2008 10:31am
http://www.reuters.com/article/bondsNews/idUSNAT00430820080822
The housing slowdown here in the US is having an effect around the world in China.
factories outside this manufacturing hub are eerily quiet, victims of a housing crisis half a world away in the United States that is sapping demand for everything from beds to bookcases.
Wenzhou is the entrepreneurial heart of Zhejiang, a thriving eastern province that was the country’s biggest exporter of furniture in the first five months of the year.
China sells about 40 percent of its furniture output overseas, with half its exports shipped to the United States, according to the China National Furniture Association.
“Business is poor this year, especially since May,” said Liu Yongcheng, a senior executive at Zhejiang Adwin Furniture Co Ltd, which is running well below capacity….
“It is getting increasingly difficult for event he most polyannish permabull to claim — at least within a straight face — that there is no US recession.”
The perma-bulls (e.g. Don Luskin)will soon claim that we are on the brink of recovery and the market forecasts 6-12 months future economic activity, so all is good from here because we are almost through the recession they say we never had.
great narrative.
if Feldstein is right, and low interest rates are not a “panacea”, then Cramer’s rant was utterly and completely without merit.
“It is getting increasingly difficult for event he most polyannish permabull to claim — at least within a straight face — that there is no US recession.”
I’m not even that goof Brian Westbury could do it at this point……
Craig,
I guess you saw that Luskin has challenged Roubini’s forecast in his latest blog…
This coming from a man who went bankrupt in the tech bubble and carried the funds of those who invested with him in his hedge fund, against the voice in the wilderness who up to this point has been about as right as you could be two years in the future..
Bruce in Tennessee
This is tough news. If the comparison of the current WLI decline is now with the early 1980s then should we be thinking 16+ months of recession? I think that’s how long the 1981-82 recession lasted. Oh, yeah, and that one was pretty global too.