ECRI's WLI

In the August 3 edition of 'Casey's Daily Dispatch', it was pointed out that the financial media last week made much to-do about the continuing fall in the Economic Cycle Research Institute's (ECRI) Weekly Leading Index (WLI).

The ECRI is an independent institute dedicated to economic cycle research. Its founder, Geoffrey H. Moore, is considered by some to be the "father of leading indicators". The WLI is the institute's most widely monitored indicator and uses 19 specialized leading indexes and is calculated using proprietary techniques.

Questioning of the WLI's accuracy and reliability by detractors centers on: the axiom "this time it's different"; recent and current stimulus; bailouts; policy interventions; and structural differences in the economy. The latest WLI reading was -10.7; Without exception, according to Casey Research, every WLI reading of -10 or lower has signaled a recession is imminent or underway. The National Bureau of Economic Research has yet to declare an end to the recession in the US which they determined commenced in December 2007. "If the WLI continues it's string of accurate forecasts, they are about to be proven right."

GB