Lakshman Achuthan: Negative Feedback Loop More Powerful Than Policy

By on September 3, 2011

The business cycle is much more powerful than anything the government can do according to Lakshman Achuthan of the Economic Cycle Research Institute (ECRI).  ECRI has an admirable track record with respect to economic forecasts.  Achuthan was one of the few economists who saw the “soft patch” coming several months ago (link).

Achuthan said the only way unemployment will come down is if there is a long expansion and he’s convinced we are not going to get it. Therefore, long duration unemployment is going to remain high. He added that while in the short run there is nothing the government can do to revive jobs, in the medium to long term they can influence the employment picture.

Achuthan says we’re in an era of more frequent recessions.  He says debt, globalization and demographics are factors contributing to the problem of shallow recoveries and turbulent downturns. He even mentions the factor of robots replacing jobs.

Achuthan indicated corporate earnings would not meet expectations.

Below are a couple of interviews with Achuthan this week:

Bloomberg:

CNBC:

2 Comments

  1. Jamie Varner

    September 3, 2011 at 5:10 pm

    Economics is the ultimate dismal science. I don’t fathom how these guys can get paid for this “work.” They’re wrong 50% of the time.

    • Zaphoid

      September 10, 2011 at 3:00 pm

      Wow, you’re deep. Good luck with that.

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