May 12th, 2012
Econintersect: Lakshman Achuthan was on the campaign trail this week – seemingly making more appearances than either Obama or Romney and almost certainly more than Ron Paul. Achuthan, Chief Operations Officer of ECRI (Economic Cycle Research Institute), was pounding the interview pavement to reiterate the call by his organization, first made last September, that the U.S. economy was heading into recession and the downturn was definite and unavoidable. The theme of the campaign this week was that the indicators are worse than they were eight months ago and they are all headed down.
The certainty of the gloomy outlook is emphasized from the following statement from the ECRI statement from September 2011 press release:
Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet. And that has profound implications for both Main Street and Wall Street.
And ECRI says things look worse now than they did then? Wow. Doug Short of Advisor Perspectives has stated one of the best one-liner reactions (actually two sentences):
Note the complete absence of wiggle room in the announcement, nor have there been any public communications from ECRI to qualify or soften its recession call. ECRI has put its credibility on the line.
Below is the Econintersect Video of the Day for yesterday, 11 May 2012, which contains one of the Achuthan interviews from the week just ended.
The economic forecasts from Econintersect, which are only forward looking one month at a time, have not shown an imminent recession is possible any month since the ECRI call. ECRI makes a forward looking forecast with the outlook 6-9 months hence, so they are attempting (with a good historical record) to predict a different ball of wax.
Editor's note: Unfortunately that is what economic forecasting often looks like - getting a vision from a "crystral" ball that seems to be made out of wax.
Is there any good news from Achuthan? Well, he says the recession that is starting will be more like the recessions of 1990-91 and 2001 than The Great Recession 2007-09.
- ECRI Update: Reaffirming the Recession Call … Again (Doug Short, Advisor Perspectives, 11 May 2012)
- U.S. Economy Tipping into Recession (ECRI Report, 30 September 2011)
- May 2012 Economic Forecast: Continued Expansion Predicted (Econintersect)