Investment

» SteveT - Gauge of U.S. economy held flat in latest week-ECRI

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http://today.reuters.com/news/articleinv...

Fri Jun 29, 2007 10:30 AM ET

NEW YORK, June 29 (Reuters) - A gauge of future U.S. economic growth held steady in the latest week but its growth rate slipped, while holding close to a three-year high, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index (WLI) stood at 142.8 in the week ended June 22, unchanged from a downwardly revised reading in the prior week.

The index held steady as weaker housing activity offset positive factors such as lower interest rates and jobless claims, said Lakshman Achuthan, managing director at ECRI.

WLI annualized growth rate declined to 6.5 percent from 6.7 percent reported the prior week.

"With weekly leading index growth holding near three year highs for the last seven weeks, U.S. economic growth prospects remain good," Achuthan said.

The index level and growth rate can move in different directions, because growth is derived from a four-week moving average.

-- posted by SteveT

» SteveT - Gauge of U.S. economy edges up in latest week-ECRI

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Fri Jul 6, 2007 10:30 AM ET

NEW YORK, July 6 (Reuters) - A gauge of future U.S. economic growth edged up in the latest week due to lower interest rates and stronger housing activity but its annualized growth rate fell slightly, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index rose to 143.0 in the week ended June 29 from 142.8 in the prior week.

The index rise was partly offset by lower stock prices, said Lakshman Achuthan, managing director at ECRI.

WLI annualized growth rate declined to 6.3 percent from 6.5 percent the prior week.

"Despite the recent dip, WLI growth remains healthy, underscoring positive prospects for U.S. economic growth throughout the year," Achuthan said.

The index level and growth rate can move in different directions because growth is derived from a four-week moving average.
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-- posted by SteveT

» SteveT - U.S. inflation pressures fall to 2-year low - ECRI

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Fri Jul 6, 2007 9:40 AM ET

NEW YORK, July 6 (Reuters) - U.S. inflation pressures fell in June to a two-year low due mainly to disinflationary moves in measures of vendor performance and interest rates, a report said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge, designed to anticipate cyclical swings in the rate of inflation, fell to 117.8 from 118.5 in May, revised up from 118.2. The previous low was 117.5 in June 2005.

"Although U.S. economic growth is firming, as evidenced by today's jobs report, the U.S. FIG remains in a cyclical downswing, showing that underlying inflation pressures are still ebbing," said ECRI managing director Lakshman Achuthan.

The index's fall was partly offset by an inflationary move in a measure of commodity prices, the report said.

The FIG's annualized growth rate, which smooths out monthly fluctuations, dropped to minus 4.2 percent in June from minus 3.5 percent in May, revised from negative 3.8.
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-- posted by SteveT

» SteveT - Bloomberg appearance 7-6-07

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I saw Lakshman on Bloomberg Friday July 6, 2007 and this is a summary of that interview. It was about an hour prior to the release of the jobs report.

The main message, the risk isn't on the horizon for a recession. The jobs report is a coincident indicator, the leading indicators tell Lakshman the economy is staying strong. We avoided a hard landing due to jobs strengths in the service sector off setting losses in manufacturing jobs. At some point manufacturing jobs become less drag on total new jobs.

Inflation: A healthy economy with no big inflation problems on the horizon. We are edging towards a goldilocks economy. Leading inflation indicators are still decreasing with FIG at a two year low. The Fed is talking the talk but has yet to see a compelling reason to do anything. FIG peaked in late Oct. and Core PCE peaked roughly three Quarters later. On average FIG has about 10 months lead time.

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-- posted by SteveT

» SteveT - Question for Lakshman

Lakshman, if you have both the time and inclination could you please answer a few questions?

I thus far have been unable to find enough data to see if my theory is valid. It seems from I've been able to find is, it take a little more than a year for CPI to peak after the FED stops increasing rates. In this cycle that seems to be much shorter.

Do I need to find more and better data to reach a conclusion that is useful? Is a shorter span between these two points indicative of a soft landing? Should I forget the whole thing?

Thanks for any consideration you care to give. As always your efforts here are greatly appreciated.

-- posted by SteveT

» ECRI - Question for Lakshman

In response to Question for Lakshman posted by SteveT:

Hi Steve, Hope your summer is going well. I've copied your questions below with my replies. I hope this is helpful. Kind regards, Lakshman

Q: I thus far have been unable to find enough data to see if my theory is valid. It seems from I've been able to find is, it take a little more than a year for CPI to peak after the FED stops increasing rates. In this cycle that seems to be much shorter. Do I need to find more and better data to reach a conclusion that is useful?

A: Your theory suggests that inflation downturns are primarily caused by Fed rate hikes. While there may be some empirical evidence to support this theory, our decades of research lead us to believe that inflation cycles are much more complex, and therefore cannot be adequately described/forecast by simple theories such as NAIRU, monetarist theories, the Output Gap, or your suggestion that there is a close link between the timing of the Fed going on hold, and an inflation downturn. While your theory does make sense, those lags are likely to be fairly variable.

Rather, it seems to be that an objective combination of the key drivers of inflation, in some cases giving partial credence to the aforementioned theories, is the best route to take. This is embodied in our Future Inflation Gauge (FIG) which has a very good record of anticipating both downturns and upturns in the inflation cycle.

Q: Is a shorter span between these two points indicative of a soft landing?

A: That is not clear, though I understand your logic that if inflation started falling the Fed would be less impelled to raise rates enough to trigger a hard landing. I think it best to also include the cyclical growth outlook based on a good leading index like the Weekly Leading Index (WLI) to determine if a "soft-landing" indeed in the offing.

Q: Should I forget the whole thing?

A: Not at all - these are great questions. A key insight ECRI's founder, Geoffrey H. Moore, gained in the 1970s was the need to look at separate sets of leading indexes of growth and inflation in order to discern what was really going on. Without doing this you're apt to equate one cycle with the other, and then your forecast risk will certainly spike around inflection points in both growth and inflation.

-- posted by ECRI

» SteveT - Question for Lakshman

In response to Question for Lakshman posted by ECRI:

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Lakshman, thank you very much. I am grateful for your contribution here and am inspired to keep learning.

-- posted by SteveT

» SteveT - Gauge of U.S. economy higher in latest week-ECRI

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Fri Jul 13, 2007 10:30AM EDT

NEW YORK, July 13 (Reuters) - A gauge of future U.S. economic growth rose in the latest week due to measures of stronger housing activity, lower jobless claims and higher stock prices, with its growth rate slightly down, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index (WLI) rose to 143.9 in the week ended July 6, from a downwardly revised 142.9 in the prior week.

WLI growth rate slipped to 6.2 percent from 6.3 percent in the prior week.

"Though WLI growth has eased slightly in the last three weeks, it steadfastly points to fairly healthy economic growth in the months ahead," said Lakshman Achuthan, managing director at ECRI.

The index rise was partly offset by higher interest rates, Achuthan said.

The index level and growth rate can move in different directions because growth is derived from a four-week moving average.
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-- posted by SteveT

» SteveT - Gauge of U.S. economy flat in latest week - ECRI

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http://www.reuters.com/article/economicN...

Fri Jul 20, 2007 10:30AM EDT

NEW YORK, July 20 (Reuters) - A gauge of future U.S. economic growth held steady in the latest week as higher stock prices and lower jobless claims were offset by softer housing activity and slower money supply growth, although the measure's annualized growth rate rose, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index was at 143.9 in the week ended July 13, unchanged from the prior week.

The index's growth rate edged up to 6.3 percent from 6.1 percent in the prior week, revised down from 6.2 percent.

"WLI growth has stayed in a tight band between 6.0 and 6.7 percent for the last 10 weeks. Thus, it is still pointing to healthy economic growth in the months ahead," said Lakshman Achuthan, managing director at ECRI.

The index level and growth rate do not always move in the same direction because the growth rate is derived from a four-week moving average.
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-- posted by SteveT

» noggin - Gauge of U.S. economy flat in latest week - ECRI

In response to Gauge of U.S. economy flat in latest week - ECRI posted by SteveT:

Steve, Thank you for all your ECRI updates.

-- posted by noggin