ECRI and the benefits of real time economic research

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Friday, February 3. 2006

The Economic Cycle Research Institute is the non-profit research outfit that pioneered real-time economic indicators, which they use to forecast economic growth and recessions. They publish a weekly index of leading economic indicators. From their web site:

As The Economist magazine recently noted “ECRI is perhaps the
only organization to give advance warning of each of the past three
recessions; just as impressive, it has never issued a false alarm.”

Their book, by president Lakshman Achuthan, Beating the Business Cycle, explains that the weekly nature of their updates means greater sensitivity to the things that matter and fewer big-chunk revisions that plague the monthly or quarterly government stats.

Why do I mention ECRI today? Well because...

Their weekly index of leading indicators has surged to a 20-month high. This is particularly compelling insight in the wake of last week's lower-than-expected 4th Quarter GDP report. ECRI points out that the economy is surging into the spring after a tight, slowish growth phase for the past several months. Because they report in near real time, this is insight that won't filter into the government stats and media for several months.

ECRI's analysis model is one of the inspirations for our company. We hope to do the same for your ability to understand the real estate market.

Incidentally ECRI also publishes a leading indicator of home prices. Though this one seems to get short shrift in the org's attention. It is published monthly rather than weekly (they obviously have a more difficult time getting real-time real estate data). And the LHPI is also decidedly less impressive in its predictive power pedigree. It's also a national aggregate, so maybe no so actionable if you're deciding whether to buy in Morgan Hill or Los Gatos. Interesting nonetheless.

What's it saying today? The ECRI LHPI took a down-turn in December along with national prices.

Check out ECRI. And pay attention to what they're saying about the state of the economy. Their message is decidedly contrary to the fears of many of the readers of this blog.

A simply marvellous research organization. We aspire to such heights.

Posted by Mike Simonsen in Economics, news, Real Estate Prices at 12:18 | Comments (0) | Trackback (1)

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Is housing a driver or passenger?
Last year at this time I cited a chart from ECRI to indicate that 2006 was unlikely to see recession and that the robust economic performance was evidence for remaining sanguine in spite of the likelihood of burst in our little real estate bubble in 200

Weblog: Altos Research Real Estate Insights
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