Monday, November 7, 2011

[Video] ECRI Sticking to Recession Call Despite Market's Swing Upward

After the historic run up in markets in October, we asked if the market was correct (the market supposedly being an efficient forecaster) or if ECRI was correct in its recession call?  [Oct 21, 2011: Does the Market Have it Wrong? Or Does ECRI?]  With a tremendous track record, the two seemingly diverged but as Lakshman Achuthan points out the market is far more focused on coincident indicators, or very near term future indicators rather than longer term points of interest.  Indeed, often as the ECRI is making a call for the beginning of a recession, the market is rallying and ignoring said calls.  Even more interesting, most recessions start in a quarter where GDP is positive.... (of course like all government data, GDP is subject to revision down the road).

This morning, Achuthan returned to CNBC for the first time in about 6 weeks - or right before the market went on its rampage - and stuck to his guns.  Unfortunately, half the interview is wasted by Steve Liesman trying to pry the long term indicators which make up the brew of ECRI's recession call, which are the basis of their for profit business.  Liesman also seemed shocked anyone could be calling for recession when the brain trust on Wall St. (which missed the debacle of 2008) says everything is fine and dandy in the U.S. economy.

7 minute view - email readers will need to come to site to view 

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