Today’s release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 132.5, up from 130.7 the previous week. The WLI annualized growth indicator (WLIg) is at -1.1, up 0.7 from the previous week, and well off its interim low of -4.7 in mid-January.

“The White Queen’s Rule”

More interesting, however, is the company’s latest publicly available commentary published earlier this week: “The White Queen’s Rule”. Who is the White Queen? Readers with a literary bent may recognize the allusion to Through the Looking-Glass, Lewis Carroll’s sequel to Alice in Wonderland. But the real answer, of course, is Fed Chair Janet Yellen. And, of course, there is an implicit pun on “rule” — the one who rules and the rule that is imposed. Here’s the opening tease:

Seven years after the financial crisis, the absence of any Fed rate hike seems surreal, and is reminiscent of the White Queen’s dictum in Through the Looking Glass: “The rule is, jam to-morrow and jam yesterday – but never jam to-day.” When Alice objects, “It must come sometimes to ‘jam to-day,’” the Queen retorts, “No, it can’t. It’s jam every other day: to-day isn’t any other day, you know.”

For a fascinating answer to the question, read the article here.

The ECRI Indicator Year-over-Year

Below is a chart of ECRI’s smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is below where it was at the start of the last recession.

Appendix: A Closer Look at the ECRI Index

The first chart below shows the history of the Weekly Leading Index and highlights its current level.

For a better understanding of the relationship of the WLI level to recessions, the next chart shows the data series in terms of the percent off the previous peak. In other words, a new weekly high registers at 100%, with subsequent declines plotted accordingly.