Investment

» permabear - Jas and I are being proven right on housing

New-home sales drop 6.6% to 834,000 in June
Total U.S. home sales fall to lowest level since 2002

The data is reinforcing the argument made by Jas and myself on this board months ago that the housing market is weakening not strengthening as ECRI suggested. Credit contagion is growing. The economy is the next shoe to drop.

-- posted by permabear

» ECRI - Jas and I are being proven right on housing

In response to Jas and I are being proven right on housing posted by permabear:

We'll see. Things have shifted some since March, including the fact that the LHPI has declined for the last 4 months following its earlier rise. This may be a signal of a fresh cyclical decline in home prices, or a continuation of the earlier decline - depending on actual data on the level (not year-over-year growth) of median real home prices, which is still coming in. We are looking into this and should have a better sense in a month or so. In any case, the scenario of housing weakness soon causing a recession remains unlikely.

-- posted by ECRI

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

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

Fri Jul 27, 2007 10:30AM EDT

NEW YORK, July 27 (Reuters) - A gauge of future U.S. economic growth fell slightly in the latest week as higher stock prices and lower jobless claims partially offset the pull from a weakened housing market, while the measure's annualized growth rate edged up, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index was at 143.7 in the week ended July 20, down from 143.9 the prior week.

The index's growth rate edged up to 6.4 percent from 6.3 percent in the prior week.

"Despite market jitters, WLI growth is holding near three-year highs, providing reassurance about the resilience of the U.S. expansion," said Melinda Hubman, research associate at ECRI.

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

-- posted by SteveT

» Jas_Jain - Re: Jas and I are being proven right on housing

In response to Jas and I are being proven right on housing posted by ECRI:

Quotes from ECRI:

"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..."

"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..."

"NEW YORK, July 27 (Reuters) ... "Despite market jitters, WLI growth is holding near three-year highs, providing reassurance about the resilience of the U.S. expansion," said Melinda Hubman, research associate at ECRI."

"Jul 27, 2007 2:58 PM.. ECRI - In response to Jas and I are being proven right on housing posted by permabear: We'll see. Things have shifted some since March, including the fact that the LHPI [Leading Housing Price Index?] has declined for the last 4 months following its earlier rise. This may be a signal of a fresh cyclical decline in home prices, or a continuation of the earlier decline - depending on actual data on the level (not year-over-year growth) of median real home prices, which is still coming in. We are looking into this and should have a better sense in a month or so. In any case, the scenario of housing weakness soon causing a recession remains unlikely."

Despite ECRI's housing index declining for four months ECRI gave "stronger housing activity" as the reason for the economy's Weekly Leading Index's growth. I wonder which of the two indexes are telling the truth about the next recession?

Jas

-- posted by Jas_Jain

» ECRI - Re: Jas and I are being proven right on housing

In response to Re: Jas and I are being proven right on housing posted by Jas_Jain:

Jas,

I'd like to remind you that the WLI is a leading index of cycles in overall economic growth. i.e., the cycle that the WLI is meant to forecast cyclical turns in is described by the coincident index of overall economic activity (made up of production, income, sales and employment measures). Sometimes people compare the WLI to GDP growth which is not exactly correct because GDP is a much narrower measure of overll activity, but it is in the right spirit because we're talking aggregate growth.

The LHPI is a second, different leading index of cycles in overall median real home prices (not growth).

Because, as you point out, the WLI may move one week up (or down) partly based on a WLI component - a "measure" of housing activity - does not mean that we've then made a forecast on home prices.

Thus, the particular ECRI comments that you recite are with respect to cycles in overall economic activity. It is possible that cycles in home prices and economic activity go in different directions. Just as in the late 1990s cycles in overall growth and inflation de-linked for a while, or in the earlier part of this decade when cycles in growth and employment de-linked. That is why it can be useful to have different leading indexes for each cycle, rather than equating everything, i.e., home prices = the economy = job growth, etc.

-- posted by ECRI

» DrToast - Re: Jas and I are being proven right on housing

In response to Re: Jas and I are being proven right on housing posted by Jas_Jain:

While we're sharing past predictions, I've got one:

"What Does the Current Yield Inversion Forecast?

That the probability of a recession in six months is above 50% and in 12 months it is above 85%."
--Jas Jain, February 27, 2006

http://www.safehaven.com/article-4681.htm

-- posted by DrToast

» Jas_Jain - Re: Jas and I are being proven right on housing

In response to Re: Jas and I are being proven right on housing posted by DrToast:

--
DrToast,

Making wrong forecast is an occupational hazard for any honest forecaster.

There are two types of recession/depression forecasters -- those who are too early and those who are always late. I am in the first category and my hunch is that ECRI would prove to be in the second category because it is underplaying the housing-led problems. We know that Wall Street economists and Fed have always been in the second category. Predicting things when they begin to happen, or after they have happened, is useless. No? I personally think that those who have never predicted recessions before they happen are dishonest when they deny that recession is not on the horizon. ECRI is far better than self-serving Wall Street forecasters.

I admit to being early in seeing the major problems, e.g., tech bubble, housing bubble. I think that hyper-intervention in the economy and markets has extended the current bullish conditions. Such things always end very badly, IMO

Jas

-- posted by Jas_Jain

» Jas_Jain - Gauge of U.S. economy lower in latest week - ECRI

--
http://www.reuters.com/article/bondsNews...

Gauge of U.S. economy lower in latest week - ECRI
Fri Aug 3, 2007 10:30AM EDT

NEW YORK, Aug 3 (Reuters) - A gauge of future U.S. economic growth fell in the latest week on weaker housing activity and lower stock prices, while the measure's annualized growth rate also fell, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index fell to 142.5 in the week ended July 27 from 143.6 in the prior week, revised from 143.7.

WLI's annualized growth rate fell to 6.1 percent from 6.4 percent in the prior week.

"Despite the fears roiling the markets, WLI growth remains at the low end of a tight band it has inhabited for 12 weeks, underscoring the cyclical resilience of the U.S. expansion," said Lakshman Achuthan, managing director at ECRI.

The fall in the index was partly offset by lower interest rates, Achuthan said.

-- posted by Jas_Jain

» SteveT - U.S. inflation pressures edge higher in July -ECRI

.
Fri Aug 3, 2007 9:40 AM ET

NEW YORK, Aug 3 (Reuters) - U.S. inflation pressures edged up in July due mainly to inflationary moves in measures of commodity prices, vendor performance and interest rates, a report by a research group said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge, designed to anticipate cyclical swings in the rate of inflation, rose to 119.3 in July from an upwardly revised 118.3 in June, originally reported as 117.8.

"Despite its latest uptick, the (gauge) remains in a cyclical downswing, suggesting that cyclical inflation concerns are premature," said ECRI managing director Lakshman Achuthan.

The index's rise was partly offset by disinflationary moves in measures of jobs and real estate loans, the report said.

The gauge's annualized growth rate, which smooths out monthly fluctuations, increased to minus 1.7 percent from minus 3.8 percent in June, revised from negative 4.2 percent.

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

-- posted by SteveT

» ECRI - WLI Slips

NEW YORK, Aug 10 (Reuters) - A gauge of future U.S. economic growth fell in the latest week on lower stock prices and higher interest rates, and the measure's growth rate was down almost 1 percent, a research group said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index (WLI) fell to 142.0 in the week ended Aug. 3 from 142.4 in the prior week, revised from 142.5.

On an annualized basis, the WLI growth rate slowed to 5.2 percent from 6.1 percent in the prior week.

"Although WLI growth has recently eased somewhat, it remains relatively close to its earlier highs, indicating a moderately positive economic growth outlook," said Lakshman Achuthan, managing director at ECRI.

The fall in the index was partly offset by stronger housing activity, Achuthan said.

-- posted by ECRI