Achuthan, ECRI Not Budging

Lakshman Achuthan, whose Economic Cycle Research Institute has a strong track record of calling economic expansions and recessions, has faced a lot of criticism for ECRI’s contention that the U.S. is in a recession that started in mid-2012. But he and the group are not wavering.

“We’re not budging from our call,” Achuthan told Business Insider in an email. “Looking back, the epicenter of the recession was the half-year spanning Q4 2012 and Q1 2013, which saw just 0.6% annual GDP growth, mostly from a freak jump in agricultural inventories (w/out which it would be 1⁄4 percent).” He also says that early in the last few recessions “there were massive gyrations of two-to-four percentage points in GDP prints, generally downward, due to very belated revisions. So GDP for Q4 and Q1 could easily end up negative after revisions.”

Achuthan says that the notion that the U.S. economy is about to take off and reach “escape velocity” is flat-out wrong. Even ignoring December’s weak jobs numbers, he says employment trends have been worsening. While the employer portion of the government’s job survey has looked strong, those numbers typically get revised downward, he says. The household portion of the survey usually is subject to far less revision and its initial numbers are more trustworthy, he says, and they haven’t been very good. “Something that nobody seems to have noticed is that the household survey, adjusted to the payroll concept, actually shows a decline in employment since the summer,” he says.