Cross-posted from Credit Writedowns
Below is a video of Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute (ECRI), talking about the economic outlook for the US. I profiled Achuthan’s views on a broad US slowdown when I wrote in May about why a global slowdown will hit by summer. Now that we are in Summer, both economic and earnings growth estimates are being cut. The question is “what should we expect going forward?” Achuthan answers this in speaking with Matt Miller, Deirdre Bolton and Lizzie O’Leary on Bloomberg Television’s "InsideTrack". He also also discusses corporate earnings.
Note that last year we had a slowdown which analyst Albert Edwards could foresee as far back as April. Throughout the summer, many people were using at the change in the ECRI’s leading indicators as a potential sign of a double dip. Achuthan repeatedly assured us there was no a double sip sign, telling Barron’s in June:
“While the plunge in WLI growth to a one-year low assures a significant slowing in U.S. economic growth in the coming months, the recent weakness has not lasted long enough to signal a new recession threat.”
When I wrote a note on recessions and recoveries in September, I mentioned that Achuthan thought we had even odds of a double dip. Eventually, the double dip threat faded. Achuthan was saying no double dip recession by October of last year even as the Fed started QE2 to deal with the slowdown.
For his part, Achuthan proved to be an accurate forecaster of the economy throughout that episode. Timing-wise, this dip is similar. I would say, though, Achuthan seems less optimistic this year than last. Take a look. I think this is a good segment.
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Thanks Ed, that was an interesting segment!
Your post is the prefect excuse to share this with y’all :)
Merle Hazard presents… Double Dippin’ http://www.youtube.com/watch?v=3geBEc2cJGs&feature=youtu.be
there’s a link to the lyrics below the video
Yeah, based on the ‘Japanese lost decade model’ I think we should be about due for the second dip. I think the timing in Japan was that the politicians freaked out over large deficits and tried to balance the budget, and that triggered a second collapse. I’m expecting local state and the federal government to wring the money out of the dwindling middle-class to fill the gap while the banks also tighten the vise on all those underwater mortgages.
Ultimately, we’ll be unemployed and homeless as we mine the abandoned suburbs for copper water pipes to send back to China. It’ll be like that road warrior movie, except no Thunderdome. (getting into the spirit of gloom)
Wot, no Tina Turner?
Maybe she’ll be the Acid Queen, like in Tommy.
WITHOUT JOBS
WITHOUT HOMES
WITHOUT FEAR
That sounds so much like, “Freedom’s just another name for nothin’ left to lose.”
I ponder, what % of the recent corporate profits are actually just price hikes from delusional inflation.
Thanks for this segment. Good to get additional inputs.
I think this is much more of an L than a W
I agree with Jamie. There was a report out in May of this year from Center for Labor Market Studies at Northeastern University which found that in the 7 quarters from when the recovery supposedly began in June 2009, 92% of its benefits went to corporate profits and wages and salaries got nothing and, in fact, lost $22 billion.
http://www.clms.neu.edu/publication/documents/Revised_Corporate_Report_May_27th.pdf
For the corps, there was a W. For everyone else, an L.
I think Achuthan’s point was that even corporations are looking at a downturn in the near future. It was a Bloomberg segment, remember. They are much more concerned with corporate profits than wages and salaries.
Deirdre Bolton and Lizzie O’Leary… WHAT Bubble heads they are! Not one vaguely insightful question. Commentators take note let a knowledgeable guest speak! The other you can throw softballs at.