Friday morning’s release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 145.7, up from the previous week’s 145.6. Year-over-year the four-week moving average of the indicator is now at 0.12%, down from last week. The WLI Growth indicator is now at -3.01, also down from the previous week.

“Construction Crumbling”

ECRI’s latest article discusses the downturn in the construction sector with their U.S. Leading and Coincident Construction Indexes reaching a 2.5 year low with expectations that the sector will continue to weaken. The article points out that the housing prices have risen in recent years, while incomes have not. ECRI’s U.S. Leading Home Price Index has begun a downturn, currently with its worst figures since 2009. 

The ECRI Indicator Year-over-Year

Below is a chart of ECRI’s smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is above where it was at the start of the last recession.

RecessionAlert has an alternative to ECRI’s WLIg, the Weekly Leading Economic Indicator (WLEI), which uses 50 different time series from various categories, including the Corporate Bond Composite, Treasury Bond Composite, Stock Market Composite, Labor Market Composite and Credit Market Composite. An interesting point to notice — back in 2011, ECRI made an erroneous recession call, while the WLEI did not trigger such a premature call. Both indicators generally move in the same direction, but the WLEI is less volatile. Frequently the latest RecessionAlert data is not available at publication time and will be posted at a later point.

Appendix: A Closer Look at the ECRI Index

The first chart below shows the history of the Weekly Leading Index and highlights its current level.

For a better understanding of the relationship of the WLI level to recessions, the next chart shows the data series in terms of the percent-off the previous peak. In other words, new weekly highs register at 100%, with subsequent declines plotted accordingly.