The argument is out whether we are already in a recession in America or whether a recession is still coming. It just all depends upon whom you talk to. Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, spoke with Bloomberg Television’s Tom Keene today and he reaffirmed that we are in a recession already.
Achuthan made this prediction in late-2011 that the U.S. was headed for a recession. He said today, “Yeah…I think a lot of people forget what our call was. What we said back in December was that the most likely start date for the recession would be in Q1 and if not then, by the middle of 2012. I’m here to reaffirm that. I think we’re in a recession. I think we’re in a recession already. As I said back there, it is very rare that you know you’re going into recession when you’re going into recession. It often takes some big hit on top of the head. In the last recession, it took Lehman to wake people up and the recession before, it took 9/11.”
As far as his definition he said, “What is a recession? It is not a statistic; it is a process between production, employment, income and sales. When you look at those four measures, they are rolling over.”
Achuthan also said, ““It is not all about GDP. It is about jobs. It is about income and sales. A recession is a vicious interplay among output input employment, income and sales. When you look at 2001, you can’t find two negative quarters in a row, yet you lost 3 million jobs. Or half the value of the NASDAQ. How are you going to tell someone that wasn’t a recession? When you look at the data today, you see that industrial production is off of its April high. Manufacturing and trade sales, much broader than retail sales, is off its December high. Real personal income growth, which does not always go negative during a recession, has been negative for several months so it is consistent with a recession having already started.”
If you want to watch that full interview it is found here. We just identified a BLS report showing that there are 3.6 million job openings versus 12.7 million unemployed. It has been impossible to ignore the recession in Europe and a slowing of growth in BRIC nations which effectively resembles a recession. This is an election year to boot.
JON C. OGG