Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
About a year ago (just over) the well regarded ECRI (Economic Cycle Research Institute) made a call that the U.S. would go into – if it was not already there – a recession. A year later the government data has not supported this view by one of the technical definitions (two back to back quarters of negative GDP) but this has not changed the tune of the firm. On the back of yesterday’s poor U.S. ISM Manufacturing number – which some blame on the fiscal cliff, and others partly on Sandy – here is a recent look at Lakshman Achuthan’s updated thoughts.
5 minute video – email readers will need to come to site to view:
“The evidence is starting to mount a recession is already underway, and we’re a few months into it,” he says, suggesting the downturn began in July.
A quick recap since Achuthan’s calls are often controversial and he would say misunderstood: In September 2011, ECRI predicted a recession was “inescapable” but Achuthan says he was “intentionally ambiguous” about the timing. In December that year, he told Bloomberg that the recession was likely to start in the first quarter and, barring that, in the first half of 2012.
Achuthan says that three of the four indicators the National Bureau of Economic Research (NBER) uses in its official recession calls peaked in mid-summer: production, incomes and sales,as measured by the Census Bureau. “Employment is the odd man out” of the NBER’s four key indicators, he admits. “[But] we do believe jobs are going to turn down and join the other indicators in their downturns” — suggesting 2013 could get off to a very rough start.
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