The Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) is at 132.5, up from the previous week's 131.7. The WLI annualized growth indicator (WLIg) is at -2.4, down slightly from -2.3 the previous week.

ECRI has been at the center of a prolonged controversy since publicizing its recession call on September 30, 2011. The company had made the announcement to its private clients on September 21st. ECRI's cofounder and spokesman, Lakshman Achuthan, subsequently forecast that the recession would begin in Q1 2012, or Q2 at the latest. He later identified mid-2012 as the start of the recession. Over the past two years he has been a frequent guest on the likes of CNBC and Bloomberg TV. In recent months he has adjusted the company's position, identifying the recession's “epicenter” as the half-year spanning Q4 2012 and Q1 2013.

Detailed Interview on ECRI's Approach

The latest public news on the ECRI website is a link to a video interview of Lakshman Achuthan discussing ECRI's approach, the company's Japan recession call, the Yo-Yo-Years, when the business cycle doesn't work, etc. The video appears on Real Vision Television. Here is a link to the interview. Note, however, that Real Television is a subscription service. The complete video is about 70 minutes in length. As a non-subscriber to the $400-a-year Real Vision Television service, I was only view able to a portion of the video.

The ECRI Indicator Year-over-Year

Below is a chart of ECRI's data that illustrates why the company's published proprietary indicator has lost credibility as a recession indicator. It's the smoothed year-over-year percent change since 2000 of their weekly leading index. I've highlighted the 2011 date of ECRI's original recession call and the hypothetical July 2012 business cycle peak, which the company previously claimed was the start of a recession. I've update the chart to include the “epicenter” (Achuthan's terminology) of the hypothetical recession.

As for the disconnect between the stock market and the mid-2012 recession start date, Achuthan has repeatedly pointed out that the market can rise during recessions. See for example the 2:05 minute point in the November 4th video. The next chart gives us a visualization of the S&P 500 during the nine recessions since the S&P 500 was initiated in 1957. I've included a dotted line to show how the index has performed since ERIC's original July 2012 recession start date (now adjusted forward by three months).