WEI said annual growth is accelerating slightly.
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 11/5, and the author’s calculations.
The WECI +2% as of 10/28 is (2.06%), while the WEI reading is 2.23%. If the 2.23% reading persists throughout the quarter, the latter could be interpreted as a year-over-year increase of 2.23%. Baumeister et al. A reading of +0.1% is interpreted as growth above the long-term trend growth rate of 0.06%. The average US GDP growth rate during 2000-19 was about 2%, so this means that the annual growth rate as of 10/28 was 2.06%.
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.
