Lakshman Achuthan Sticks to ECRI’s Recession Call

By on December 9, 2011

Lakshman Achuthan - ECRIBloomberg’s Tom Keene interviewed Lakshman Achuthan, co-founder of the Economic Cycle Research Institute (ECRI), this week. Achuthan predicted a recession earlier in the year (link).

Keene asked Achuthan was happened to the recession call he made back in September. Achuthan said most economists focus on co-incident and co-leading data. He admitted it didn’t appear the economy was in recession in Q3, but said we don’t know about Q4.

Achuthan would only admit he was wrong if there wasn’t a recession in Q4 or the first half of 2012. He said we wouldn’t know if he was wrong for sure until a year from now. He gave a couple of previous examples where a recession (1973 and 2007) showed up months after it officially began. Achuthan said it wasn’t “a precise science.”

Keene brought out a chart of real GDP from the mid-90’s until present. Achuthan characterized a recession as a contraction in production, employment (very key), income and sales.

Achuthan commented further on previous recessions, the ECRI’s weekly indicator chart, the forward looking indicators which persist downward, the fallacy of the “muddle through” economy, GDI versus GDP, and the stock market as a leading indicator.

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