The New York Fed's Weekly Leading Index (WLI) declined and continues to show an economy that is significantly worse than seen during the Great Recession.

Analyst Opinion of the Weekly Leading Index

This data set should be considered a high-frequency coincident indicator on a par with the Aruoba-Diebold-Scotti Business Conditions Index produced by the Philly Fed - and both show conditions caused by the coronavirus pandemic are already worse than the Great Recession. However, the Aruoba-Diebold-Scotti Business Conditions Index is improving whilst the WLI is still declining. Logic would say with the partial reopening of the economy - the Aruoba-Diebold-Scotti Business Conditions Index seems to be correct.

The WEI is an index of ten daily and weekly indicators of real economic activity scaled to align with the four-quarter GDP growth rate.

The current situation according to the New York Fed:

June 30, 2020: Update

• The WEI is currently -7.64 percent, scaled to four-quarter GDP growth, for the week ended June 27 and -7.03 percent for June 20; for reference, the WEI stood at 1.54 percent for the week ended February 29.
• Today's decline in the WEI for the week of June 27 (relative to the revised value for June 20) is driven by a decrease in consumer confidence, which more than offset small increases in retail sales and steel production. We anticipate upward revisions as more data become available. The WEI for the week of June 20 was revised upward as a result of the staffing index release providing a more positive signal than previously available data.

What is the Weekly Economic Index (WEI)?

The WEI is an index of real economic activity using timely and relevant high-frequency data. It represents the common component of ten different daily and weekly series covering consumer behavior, the labor market, and production. The WEI is scaled to the four-quarter GDP growth rate; for example, if the WEI reads -2 percent and the current level of the WEI persists for an entire quarter, we would expect, on average, GDP that quarter to be 2 percent lower than a year previously.

Comparision to the Aruoba-Diebold-Scotti Business Conditions Index

(Click on image to enlarge)

Components of the Aruoba-Diebold-Scotti Business Conditions Index

The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high observation frequency. Its underlying (seasonally adjusted) economic indicators (weekly initial jobless claims; monthly payroll employment, monthly industrial production, monthly real personal income less transfer payments, monthly real manufacturing and trade sales; and quarterly real GDP) blend high-frequency and low-frequency data. The ADS index on this web page is updated in real time as new or revised data on the index's underlying components are released. Hence at the time of any ADS update, the index is based on all information on all indicators available at that time.

The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions noticeably worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.

source: New York Fed