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« Art Laffer and the Triumph of Politics | Main | Understanding the Employment Issue »

June 12, 2010

Comments

oldprof

Thanks for the help. I have seen a number of sources of speculation, and I am interested in anything with more authority.

Jeff

Vittorio Mazzolata

Re: "I agree that the continuing claims news seems positive, but I do not have a good historical basis for interpreting the data series."

Continuing claims is a leading indicator of the unemployment rate (see last 3 cycles of continuing claims vs. the unemployment rate -- once a coincident indicator and twice a leading indicator).

Vittorio Mazzolata

"In summary, evidence from simple tests suggest that ECRI WLI movements coincide with or slightly trail stock market behavior, offering little trading intelligence over the short or intermediate terms."
http://www.cxoadvisory.com/economic-indicators/ecris-weekly-leading-index-and-the-stock-market/

From Secrets of Successful Speculation By Ulrich Peter Krach:

"The components of the ECRI weekly leading index are money supply plus stock & bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims."

http://i49.tinypic.com/oggykk.png


U.S. Weekly Leading Index (WLI)
http://www.businesscycle.com/resources/

chil25

you got right future is coming like freight train down to a broken bridge

oldprof

Vittorio -- I agree that the continuing claims news seems positive, but I do not have a good historical basis for interpreting the data series. The initial claims series is overemphasized by many, but I have found it to be a useful indicator.

As to the ECRI index makeup, they have a proprietary indicator. I have seen speculation about the elements. Are you sure that the stock market is part of it? Please post or send me a source.

Thanks for your comment.

Jeff

Vittorio Mazzolata

Re: “Initial jobless claims were supposedly a positive.  I do not get it.”

The continuing claims declined from 4.717 mln claimants from the week ending May 22 to 4.462 mln for the week ending May 29.

This is a significant drop – big positive.

Re: “ECRI”

Stock market performance is one of the components of ECRI. I am perplexed as to why everyone freaks out over ECRI decline during ~14% stock market correction.

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