The negative data continues to mount. The ECRI’s leading growth indicator slowed to -7.7% on a year over year basis. Recession has never failed to materialize after a -10% reading. We’re very close. At best we’re likely staring at a substantial economic slowdown in H2. Via Reuters:
“A measure of future U.S. economic growth fell slightly in the latest week, while its annualized growth rate continued to decline, indicating the economy is about to slow, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index slipped to 122.2 in the week ended June 25 from 122.9 the week before.
The index’s annualized growth rate fell to minus 7.7 percent from minus 6.9 percent the prior week. That was its lowest level since May 22, 2009 when it stood at minus 8.7 percent.”
Updated (11:15 AM EST):
The ECRI is also out with their monthly inflation gauge. The ECRI says the current environment is a reflection of the disinflationary forces in the economy. Via Reuters:
The Economic Cycle Research Institute’s U.S. Future Inflation Gauge (USFIG), designed to anticipate cyclical swings in the rate of inflation, fell to 97.4 in June from a revised 99.7 in May, which was originally reported at 98.9.
“Underlying inflation pressures are easing further, although deflation dangers are not yet back on the table,” ECRI said in a statement.
The USFIG annualized growth rate, which smooths out monthly fluctuations, fell to 5.7 percent in June from a revised 14.0 percent. The May figure was originally reported at 12.5 percent.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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