Lakshman Achuthan: The Economy Has Been in Recession Since July

By on December 7, 2012

Lakshman Achuthan - ECRIThe economy is now in recession and has been since July according to Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute (ECRI). Achuthan was interviewed by Larry Kudlow yesterday making his case that, despite a rising stock market and employment, the economy is in dire straits.

According to Achuthan the definition of recession is not “cherry picked,” but based on four indicators that have been used for decades: 1) industrial production, 2) personal income, 3) sales, and 4) employment. The chart below indicates that three of the indicators peaked in July:

Geoffrey Moore Recession Indicators

Kudlow pointed out that employment is still rising, while Achuthan stated, outside of a recession, you haven’t seen a decline in both production and income in over half a century.

Achuthan said job growth is not inconsistent in a recession. He pointed out jobs growth increased for 8 months after a recession began in the 1970’s.

The interview (available below) continued with Kudlow asking Achuthan to comment on the influencing factors of rising GDP and the low-interest rate policy of the Fed.

Back in July, Achuthan told Bloomberg’s Tom Keene that the recession indicators were rolling over and the economy was in recession [link].

One Comment

  1. What Should I Buy Stock In

    December 7, 2012 at 10:56 pm

    Thanks for sharing your updated article in the stock market field. As you mentioned, the four key factors should be at the peak in order to increase the economic level.

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