May 2021 New York Fed Weekly Economic Index (WEI): Index Improvement Continues

The New York Fed's Weekly Leading Index (WLI) improved mostly due to the economic sharp deterioration which occurred one year ago. This index recovery is improving based on the 13-week rolling average.

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:

The increase in the WEI for the week of May 1 reflects increases in tax withholding and electricity output, which more than offset an increase in initial unemployment insurance claims and decreases in fuel sales and rail traffic (relative to the same time last year). Because the WEI measures changes over a 52-week period, the large positive reading also reflects the sharp deterioration in economic conditions during the same time last year.

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

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