ECRI's Famous Recession Predictor Is Finally Catching Up To Its True Master – The Stock Market

Lakshman Achuthan and his firm ECRI has been taking a lot of heat for maintaining an aggressive recession call, even as the index has turned up.

Bank of America’s Mary Ann Bartels just published her massive 102-page chart book.  Included is this interesting chart of ECRI’s Weekly Leading Index on top of the S&P 500.

From Bartels’ note:

Weekly Leading index held support and is rising catching up to the US equity market
The pattern had been the S&P 500 up with the ECRI Leading Index lagging, but the Leading index is catching up: In 2010 and 2011, the S&P 500 tracked the Economic Cycle Research Institute (ECRI) Weekly Leading Index of US economic growth. Both the Weekly Leading Index and the S&P 500 declined from the April 2010 high and both improved off the summer 2010 lows. In 2011, the ECRI Weekly Leading Index fell from an early April high and the US equity market followed. Since early October, the S&P 500 has rallied sharply, but the ECRI Weekly Leading Index has not confirmed this rally, but in recent weeks, the Weekly Leading Index has shown signs of bottom and may be set up to catch up to the S&P 500. What negates this improvement is a break below the late 2011 and mid 2010 lows for the Leading Index.


Photo: Bank of America Merrill Lynch

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