WEI speeds up and WECI slows down.
figure 1: Lewis-Mertens-Stock Weekly Economic Index (blue) and Baumeister-Leiva-Leon-Sims US Weekly Economic Conditions Index plus 2% Trend (green), all annual growth rates in %.Source: Federal Reserve Bank of New York fred, WECIaccessed 1/11, and author's calculations.
The WECI +2% as of 12/30 was 1.77%, while the WEI reading was 2.94%. If the 2.94% reading persists throughout the quarter, the latter could be interpreted as a year-over-year increase of 2.94%.this Baumeister et al. A reading of -0.23% is interpreted as growth below the long-term trend growth rate of 0.23%. The average U.S. GDP growth rate during 2000-19 was about 2%, so that means the growth rate for the year ending 1/6 was 1.77%.
Recall that the WEI relies on ten series of correlations for which weekly frequency is available (e.g., unemployment claims, fuel sales, retail sales), whereas the WECI relies on a mixed-frequency dynamic factor model.
