An alert reader sent me to the video below where ECRI’s Lakshman Achuthan says quite explicitly that he expected recession to begin in Q3 or Q4 of last year. Yesterday, I wrote that after reviewing a number of his performances over the last year I was unable to find an instance where he gave a specific recession date. Now I have found one (hat tip foptin). So it does look like Achuthan has changed his story and that he made his recession call last year anticipating it would occur then but that it did not. To me, this qualifies as a “false alarm”. The question as to whether ECRI make good forecasts which can reliably be used as a business or investment planning tool is then open.
I would love to see ECRI explain why they have changed the date when they felt recession would begin and whether this means they were wrong in forecasting recession in 2011. Yesterday, I said “I don’t think Achuthan is changing his story in the least.” I can’t say that now. It certainly looks to me now like ECRI was wrong initially and that Achuthan has changed his timetable subsequently.
P.S. – As to my own view, I would admit the data are weak right now, yes. But it still doesn’t quite add up to recession for me. Even discounting future revisions, I would expect second derivative (change in the change) numbers to nearly all be negative for weekly earnings, initial jobless claims, the unemployment rate, retail sales, production, and GDP. They are not. At some point I will be posting my analysis on this at Credit Writedowns Pro. A eurozone disaster could trigger recession, certainly. And I anticipate the fiscal cliff will trigger recession, but that is a 2013 event that can still be averted. But I would be very surprised if we subsequently learned that we are in a recession right now.
This post originally appeared at Credit Writedowns and is posted with permission.