ECRI Weekly Leading Index Update - Friday, July 19

This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) is currently at 145.9, down 0.4 from the previous week. Year-over-year the four-week moving average of the indicator is now at -1.63%, up from last week. The WLI Growth indicator is now at -0.68, also up from the previous week.

"De-Globalization Diagnosis Predated Trade War"

ECRI's latest article details the trending de-globalization that has taken over the last couple of years. They describe the trend in conjunction with the global growth decline and explain that when global GDP growth outpaces global trade growth, we have de-globalization. The article details the unequal nature of deglobalization, stating that exports in the Eurozone have trended higher than their Western counterparts. Read more here

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The ECRI Indicator Year-over-Year

Below is a chart of ECRI's smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is above where it was at the start of the last recession.

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WLI since 2000

Appendix: A Closer Look at the ECRI Index

The first chart below shows the history of the Weekly Leading Index and highlights its current level.

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WLI Complete Series

For a better understanding of the relationship of the WLI level to recessions, the next chart shows the data series in terms of the percent-off the previous peak. In other words, new weekly highs register at 100%, with subsequent declines plotted accordingly.

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WLI Percent off Peak

As the chart above illustrates, only once has a recession ended without the index level achieving a new high -- the two recessions, commonly referred to as a "double-dip," in the early 1980s. We've exceeded the previously longest stretch between highs, which was from February 1973 to April 1978. But the index level rose steadily from the trough at the end of the 1973-1975 recession to reach its new high in 1978. The pattern in ECRI's indictor is quite different, and this has no doubt been a key factor in their business cycle analysis.

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