Economic Cycle Research Institute’s Lakshman Achuthan on The News Hub discusses why he believes the U.S. economy is heading back into recession in the next several months.

May 9, 2012

Category: Economy, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Why U.S. Economy is Heading Back Into Recession”

  1. It’s a depression. It started in 2008.

    22.5% unemployment is all anyone needs to know.

  2. JoseOle says:

    Achuthan needs to man up and own his bad call of Sept 2011. If you go back and listen to those interviews, he speaks as if a recession is imminent. It’s been 7 months. I see a spinoff here — the Broken Clock Research Institute. Blodget shares my view, as seen here:

    http://articles.businessinsider.com/2012-03-10/markets/31142355_1_recession-gdp-growth-oil-prices

    Here are some links to Sept 2011 interviews with Achuthan:

    http://video.cnbc.com/gallery/?video=3000048636

    http://finance.yahoo.com/blogs/daily-ticker/going-lot-worse-ecri-achuthan-says-recession-unavoidable-141929160.html

    http://www.bloomberg.com/video/76372300/

  3. CTB says:

    Economists seem to predict about 300% of all recessions. Of course they also miss some.

  4. Futuredome says:

    There was going to be recessions in 1995 and 2003 as well, you just had to wait. Might as well include 1953(throwing out the post-Korean war recession which was a blip) and 1965.

  5. VennData says:

    The recession will only effect Capricorns and Sagittarians.

  6. GZR says:

    Futuredome

    The post Korea recession was more that a blip if you were caught in it. I was. It lasted the last two years of Ikes term. Kennedy’s speech “Let’s get this country moving again” was probably the difference in his close victory over Nixon in 1960
    (Not counting the Cook county “How many votes do you need to win” delayed effort by Wm Daley.)

  7. IMHO, Achuthan’s is chasing anomalies within the long-term data. The TRI saw it developing last summer as well and its Aug 29 2011 graph warned of a monthly contraction for April 2012: http://trendlines.ca//TrendlinesRecessionIndicatorUSA110829.png

    Within a month (Sept 23) ECRI was warning that an “unavoidable” NBER defined Recession would start in the next two weeks. After that false positive, they predicted on Feb 27 a new Recession would start in July 2012. Now this week Achuthan is making the bold prediction that he was right last Sept and we will see so in BEA’s July annual revisions.

    Only one problem. In 2008, TRI was tracking probable negative GDP even though BEA was wrong. It charted -2.5% GDP in late Jul/Aug/Sept, -4% in Oct, -7.5% in Nov & -9.5% in Dec. BEA was still only -o.5% in its Dec/2008 release: http://trendlines.ca//TrendlinesUSARecessionMeter1979-81223TRI.png

    This time the TRENDLines Recession Indicator is not mirroring the gloomy GDP inferred by Lakshman Achuthan of ECRI. Each update since Sept 26 2011 has upgraded Year 2012. Oct/2011 GDP was gauged to have an upper bound of 4.3% and May 2012 could be as high as a 3.5% pace. TRI has not recorded a single negative month since Sept 23rd.

    That said, I will concede some of the forward-looking data is still very troubling and on its own infers GDP is running at -1 to -2%. But because BEA’s July revisions in 2009/2010/2011 were amended to almost match perfectly the TRI real time estimates, I am somewhat confident Q4/Q1/Q2 will not be revised to reflect negative growth.

    current TRI with 90-day FreeVenue lag: http://trendlines.ca/free/economics/RecessionIndicatorUSA/USA-TRI.htm

  8. susanj says:

    @JoseOle Says Achuthan made a bad call, and he usefully provides some links. I watched them and Achuthan says the economy is “tipping into” a new recession, but when pressed on timing says he doesn’t know, it may have started in coming months, but that it won’t be known for a year when it began. Those who are bashing that call may have overlooked the explicit uncertainty about the timing. Perhaps many are making the mistake of conflating an economic recession call with an immediate bear market call. Any investment professional knows the market is not the economy and vise versa.