The ECRI has a nearly polar opposite perspective of the world from myself. They are still expecting an incredibly robust economic recovery and are now reporting that they expect inflation to jump considerably. Their latest report shows that their leading economic indicator slipped a bit this week, but is still pointing to a very robust global recovery:
An index of future U.S. economic growth slipped in the latest week, but its yearly growth rate climbed to a new record high, indicating a smooth recovery in the near-term, 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 127.1 in the week to Sept. 25 from an upwardly revised 127.9 the prior week, which was originally reported as 127.8.
Last week’s figure marked a 60-week high.
The index’s yearly growth rate rose to new all-time high of 25.1 percent in the latest reading from 24.3 percent the prior week.
“With WLI growth rising to yet another record high, the economic recovery is highly unlikely to falter in the next few months,” said ECRI Managing Director Lakshman Achuthan.
Achuthan recently told Reuters that unease over rising unemployment, debt-laden consumers, and fears of a dip in economic growth are typical of recessionary times, and do not necessarily signal roadblocks to recovery.
Last week, Achuthan said current data shows that economic recovery is “far from fragile.”
In addition to their robust economic outlook, the ECRI is also calling for higher inflation. The ECRI’s FIG indicator rose for the month of September and now points to a cyclical spike in inflation:
A monthly gauge of U.S. inflation pressures continued to rise in September to an 11-month high, suggesting an upswing in prices expected in an economic recovery, a research group said on Friday.
The Economic Cycle Research Institute’s U.S. Future Inflation Gauge (USFIG), designed to anticipate cyclical swings in the rate of inflation, rose to 90.6 in September from an upwardly revised 89.7 in August, which was originally reported at 89.6.
“The upturns in the USFIG and its components have become fairly pronounced, pervasive and persistent. Thus, while this is not yet a significant policy concern, U.S. inflation is on the cusp of a cyclical upswing,” said Lakshman Achuthan, managing director at ECRI.
Achuthan recently told Reuters that if the FIG continues to climb, the Fed’s exit strategy may come into play sooner than expected.
The September USFIG annualized growth rate, which smooths out monthly fluctuations, spiked to 12.1 percent from 6.6 percent in August, which was revised higher from 6.5 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.