There are two opposing schools of thought on the current economic condition. One the one side are those who for see a "double dip" recession with the downturn continuing into next year. On the other side we have another group who see economic growth picking up rather than slacking off next year.
The Economic Cycle Research Institute has developed an index that "predicts" future growth (RPT-ECRI). The index is predicting record growth rate shooting to a hitting a record high. Its weekly leading index rose to 128.3 from 127.1 the prior week.
The index's yearly growth rate rose to an all-time high of 26.1% in the latest reading, up from the previous reading of 25% the prior week.
Lakshan Achuthan, managing director, said: "With the WLI (Weekly Leading Index) growth rocketing to a new record high, the economic recovery will prove to be far more resilient in coming months than most believe possible." He added: "The risk of a double dip recession is very low."
The index was pushed up by stronger-than-expected housing activity.
Do you agree with these findings?
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Reader Comments (Page 1 of 1)
10-09-2009 @ 2:20PM
Jacky said...
It could just be the calm before the storm.
10-09-2009 @ 4:07PM
jesse.iniguez said...
Spell / grammar check is needed. I'd suggest to read the article out loud to improve the readability.
10-09-2009 @ 3:50PM
e.krabs said...
Fascinating and provocative. Here's their web page regarding their "approach":
http://www.businesscycle.com/about/approach/
In their own words, "ECRI regularly monitors over a hundred proprietary indexes to monitor the global economy." I don't know the details regarding what these proprietary leading indexes are, but I wonder... do they somehow compensate for the governments' economic stimulus? The same "loans" that we have to eventually pay back? Or does it simply say, "Oh look! It's going up, so we must be recovering"?
In a stroke of irony, the opening paragraph reads, "Economic forecasting deserves its bad reputation in predicting recessions and recoveries. As a 63-country IMF study concluded, "The record of failure to predict recessions is virtually unblemished."
I wonder if they are indeed something different, or just more of the same?
10-10-2009 @ 7:55AM
George said...
Achuthan was right on when it came to his predictions regarding recession and resumption of growth. In April he was the only one to predict that growth will resume in the third quarter while Roubini and Stiglitz along with Ken Rogoff pedalled their doom and gloom. However, they were right on one thing..this time it is different but in the wrong context. This time it is different because the US consumer will not lead the recovery. It is Asia..China, India and Singapore with Australia thrown into the mix. US dollar has to continue falling so that we can export our way to prosperity like the Asians did in the past!
10-09-2009 @ 5:02PM
emo said...
Record economic growth???? In 1984, GDP growth was over 7%. One quarter in 1975 had 10% GDP growth. Is he saying we'll see that? Household savings has fallen to 3% and consumer credit is falling. There will be no record growth in the near term
10-09-2009 @ 6:41PM
Guitarpack said...
Doesn't anyone proofread this stuff?
10-11-2009 @ 10:31AM
junkndump said...
See what ECRI's research director says about their recession and recovery calls and how just following those signals would get you 8% over S&P during the past nine years:
http://www.thestreet.com/story/10608336/1/solid-indicators-are-investors-best-friend.html