Saturday, March 10, 2012

Time To Call BS on ECRI's Recession Prediction?

Last September, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) announced publicly that "the jury is in and the verdict is recession," saying that a new recession was unavoidable based on the declines in the ECRI's weekly leading index.  But since that prediction, the ECRI's index has turned up, and is now at 124.3 for the first week of March, more than 4 points above the 120.0 reading at the end of September (see chart above).  Since the first of the year, the index has increased in 6 out of the last 9 weeks.

The Bonddad Blog says now that "It's Time to Call BS on ECRI's Recession Prediction," and makes the case using data and charts, you find it here.  So far, Achutan is sticking with his recession prediction.

10 Comments:

At 3/10/2012 10:32 AM, Blogger Bill said...

I believe he said the recession was "imminient", which even giving him 6 months would mean Q1 GDP would have to be negative for his prediction to have any chance of being accurate. We'll see.

 
At 3/10/2012 10:33 AM, Blogger PeakTrader said...

This recovery is similar to the 1933-37 recovery, except it's worse, because of the additional net debt accumulation (from federal spending).

Chart of the 1930s economy:

http://www.web-books.com/eLibrary/Books/B0/B62/IMG/fwk-rittenmacro-fig17_001.jpg

 
At 3/10/2012 10:49 AM, Blogger PeakTrader said...

The Obama recovery. Chart:

http://stateofworkingamerica.org/files//GDP_gap_2000-111.png

 
At 3/10/2012 11:58 AM, Blogger Ironman said...

If Achutan waits long enough, he'll probably be right, and by long enough, we mean 2013....

About the most favorable thing that can be said of Achutan's call is that the U.S. appears to be on track for something like a "microrecession" in the second quarter of 2012, with a microrecession being defined as a period of either very slow or negative economic growth that occurs over a very short period of time. The data indicates that the pace of growth will then pick up in the third and fourth quarters of 2012.

In form, that most likely means that we may see some regions within the U.S. dip into recession territory during 2012-Q2, while others will continue to grow much more strongly - more than offsetting the slow or negative growth in low performing regions.

Here, the high performing regions will most likely be found in the midwest and Gulf Coast, which will benefit from comparatively lower energy prices from new domestic oil and gas production and their position in connecting the Canadian oil market to the world.

The low performing regions will most likely be those lacking direct energy infrastructure integration with these regions, which will be hamstrung by higher energy costs. Specifically, the Northeast.

 
At 3/10/2012 1:58 PM, Blogger VangelV said...

The employment numbers are weak. Credit growth is pushing people over the edge again. The housing market is still falling. Bernanke is doing all he can to keep a recession away until the next election. Take away the easy money and the economy falls over the edge again.

By the way, that is what should happen. We need to liquidate the malinvesments and establish a basis for sustainable economic activity.

 
At 3/10/2012 2:00 PM, Blogger crj said...

Lets not fool ourselves at the ability to predict such things with perfect accuracy and remember the old joke "Economists have predicted 13 of the last 8 recessions."

 
At 3/10/2012 2:10 PM, Blogger Jon Murphy said...

I call bullshit on his "recession."

There was a recent interview with him where he changed his definition of recession from no growth to little growth. So, by his post facto definition change, he is correct.

 
At 3/10/2012 2:11 PM, Blogger Larry G said...

but not a one apparently predicted the width and depth of this recession, eh which seemed to defer all the "experts" predictions.

 
At 3/10/2012 2:16 PM, Blogger Larry G said...

here's a pretty good set of 3 charts from WaPo:

http://goo.gl/9IkHU

 
At 3/10/2012 6:41 PM, Blogger Expected Optimism said...

There's a reason they say economists have successfully predicted 9 of the last 5 recessions.

 

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