Fund manager John Hussman is amping up his recession warnings, saying that, “based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.”

Hussman recently noted that of the four pieces of his recession indicator, the only one not yet signaling a recession was the ISM Purchasing Managers Index, which needs to fall to 54 or lower. The most recent reading, from May, was well above that, at 59.7. But now, Hussman notes in his latest market commentary that the ECRI Weekly Leading Index — which has been a leading indicator for the ISM index, has declined to -6.9% — a bad sign.

Hussman also says that investors shouldn’t base their assumptions on what will happen in the economy and market on historical trends of the past 30 or 40 years, because the credit strains and deleveraging risks the U.S. faces make such comparisons “out of sample”. He says that if you broaden your outlook, however, there are other periods that offer good comparisons, and he says Kenneth Rogoff and Carmen Reinhart’s This Time Is Different highlights many of them. “The book presents lessons from a massive analysis of world economic history, including recent data from industrialized nations, as well as evidence dating to twelfth-century China and medieval Europe,” Hussman says. “Reinhart and Rogoff observe that the outcomes of systemic credit crises have shown an astonishing similarity both across different countries and across different centuries.”

Those outcomes include housing price declines averaging about 6 years, equity price downturns of about 3.4 years, and increasing unemployment for almost 5 years. On average, unemployment rises for almost 5 years. Using the Bear Stearns collapse as a starting point, Hussman writes, “The average adjustment periods following major credit strains would place a stock market low closer to mid-2011, a peak in unemployment near the end of 2012 and a trough in housing perhaps by 2014. Given currently elevated equity valuations, widening credit spreads, deteriorating market internals, and the rapidly increasing risk of fresh economic weakness, there is little in the current data to rule out these extended time frames.”

“Put bluntly,” Hussman says, “I believe that the economy is again turning lower, and that there is a reasonable likelihood that the U.S. stock market will ultimately violate its March 2009 lows before the current adjustment cycle is complete. At present, the best argument against this outcome is that it is unthinkable.”