The Great Leading Indicator Smackdown

For those of you into charts and that follow economic indicators then this post is for you.  This post comes from Doug Short vice president of research at Advisor Perspectives and provides some great insight.  There are a couple major economic indicators that people follow 

1. ECRI Weekly Leading Index
2. Conference Board's monthly updates of its index of Leading Economic Indicators 

I wrote about the ECRI and its recession prediction back in the beginning of November ECRI Recession Watch.  Usually these two indicators are highly correlated moving together up or down.  However the LEI has surged higher setting new records while the ECRI has started to steadily decline.

Lakshman Achuthan head of the ECRI has stood the firm's recession call.  See the CNBC video below.  Although the interview took place back in November ECRI continues to stand by it's call.  The ECRI has an outstanding track record of correctly calling the past several recessions so their calls should be taken seriously.

The second video comes from Bloomberg.  Both videos give a little more insight into the development of ECRI's call and the detail behind their thinking.