Dwaine van Vuuren | Mar 27, 2012 08:52AM ET
More recently, ECRI has switched from the use of posted an excellent analysis of the rationale behind this descision that highlights some interesting subtleties between the smoothed growth rate and the annualised growth rate.
In a nuthsell, Prieur concludes that even if the smoothed growth rate were to start falling, the 12-month growth rate will continue to rise as it “lags” the smoothed growth rate. This would in part seem to debunk ECRI’s statements that 12-month growth rates are foretelling a recession. To further illustrate Prieur’s analysis, we perfomed a correlation optimisation between WLIg growth figures and 52-week growth figures shifted back in time by x-months. We found the highest correlation of 0.916 when the 52-week growth was shifted back by 7 weeks (conversely the WLIg shifted forward by 7 weeks). The excersise was performed over the entire history of the WLI since 1967 and proves that statistically at least, the WLIg leads the 52-week growth rate by about 7 weeks.
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