ECRI Co-Founder Says...

[Parsad]

...we are already in the midst of a recession...he'll be right eventually.  Cheers!

 

http://finance.yahoo.com/blogs/daily-ticker/ignore-gdp-fiscal-cliff-u-already-recession-ecri-174612999.html;_ylt=AnmWr8z1QcVcsYx_hYRduZOiuYdG;_ylu=X3oDMTRwN2R2MmhlBG1pdANGaW5hbmNlIEZQIFRvcCBTdG9yaWVzIG1peGVkIGxpc3QEcGtnAzA2ZmFhMWJhLThmNjAtM2I5My04M2U4LTFkMGEzNGE0ZGZmNQRwb3MDMQRzZWMDTWVkaWFCTGlzdE1peGVkTFBDQVRlbXAEdmVyA2ZhZWYyM2E4LTNhNWQtMTFlMi1hNDNkLTNjZDkyYmZmMjAxNg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

[original mungerville]

I don't know, he hasn't been proven wrong yet: he said it would start early 2012 or if not by mid-2012. He then said we would only know 6-mths later. So he's got one month to go before we can say he was wrong on the original call. He seems to have been consistent in his message throughout. The New Year will show whether he was wrong or not. 

 

We certainly don't have the stock market as a forward indicator this time given all the QE. Further, its not like the long-end of the bond market can really invert either! Normally, the latter is a good recession indicator...but its QE to infinity it seems. This doesn't end well.

 

[Parsad]

I don't think he's right at all.  If there was no QE, then yes, he would have been correct.  But we do have QE and up the ying-yang!  That changes everything...for now anyways.  So, plainly he was incorrect as were many others, because he/they did not include Bernanke in the equation.

 

And I agree, at some point it will not end well if they cannot bring it all back in with the same ability as they poured it all out.  Cheers!

[ubuy2wron]

What if they gave a recession and nobody came.

[ERICOPOLY]

And I agree, at some point it will not end well if they cannot bring it all back in with the same ability as they poured it all out.  Cheers!

 

The doubts I'm having with the "this can't end well" thesis is that there is still a large amount of debt out there.

 

So it's not like borrowing will come roaring back.  Without borrowing roaring back, I'm not sure where they run into trouble.

[treasurehunt]

I don't know, he hasn't been proven wrong yet: he said it would start early 2012 or if not by mid-2012.

 

You are giving ECRI a lot of leeway here. It was March 2008 when ECRI made the call on the recession that started in Dec 2007. So in that case they were four months late and still generally get full credit for calling the recession. Now it looks like they are at least nine months early (assuming a recession started in mid-2012) and apparently deserve full marks nonetheless.

 

In the Sep 2011 call, ECRI said that "the U.S. economy is indeed tipping into a new recession". It must be a hell of a slow tip if it takes nine months or more for the recession to begin after that. They also said this: "It means that the jobless rate, already above 9%, will go much higher". We'll see.

[FiveSigma]

With housing recovering based on almost every imaginable indicator, it's hard to imagine what is tipping US back into recession.

 

And mind you, that was the sector with most overcapacity and depreciating collateral that slammed the financial system.

[original mungerville]

Look like Hussman also thinks the US entered recession in Q3...see below

 

(BTW, ECRI claims that in 2011 or whatever they said the recession would start at the latest by mid-2012 and so are claiming they may still be right. I don't know all the history, and I am not expert in these economic details, I am just raising the flag that the US may already be in a recession as ECRI is reasonably credible - whether they were 6 months off, or only right on the very outside of their call, I don't really care too much. They may indeed still be proved wrong.)

 

 

December 3, 2012

How to Build a Time Machine

 

John P. Hussman, Ph.D.

All rights reserved and actively enforced.

Reprint Policy

 

With industrial production, capacity utilization, real disposable income, real personal consumption, real sales retail and food service sales, and real manufacturing and trade sales uniformly declining in their latest reports, coincident economic indicators – having generally peaked in July – are now following through on the weakness that we’ve persistently observed in leading economic measures. We continue to believe that the U.S. economy joined a global economic downturn during the third quarter of this year.

 

While we use a broad range of signal extraction and noise-reduction methods in our own work, the economic data in recent months has required less and less sophisticated analysis, as many of the most reliable leading economic measures have turned clearly lower (e.g. Philly Fed Index, Chicago Fed National Activity Index, and the new orders and order backlog components of numerous regional and national Federal Reserve and purchasing managers surveys). Still, the leading/coincident/lagging relationships across these indicators remain important. Not surprisingly, analysts have now turned to the last refuge of the economic data, which is to focus on historically lagging measures such as payroll employment.

 

....

[Kraven]

You have to love the prognosticators.  The best I heard on this type of thing was maybe a year or so ago.  Jim Rogers was being interviewed and "called" for a recession in the next year or 2.  The interviewer practically shouted "so Jim Rogers is calling for a recession!  You heard it here folks!"  Rogers kind of laughed and said something to the effect that "on average there is a recession every 4 or 5 years or so.  The last one was around 3 years ago, so the next one will probably be in a year or 2.  No magic to it."

[Gopinath]

This prediction says more about the person who is predicting than the prediction itself :-)

[ERICOPOLY]

I guess you should be careful for what you fear.  The recession the ECRI has so accurately predicted has been great for BAC's stock price thus far.

 

There you go, famous last words.  Now the market goes down 50%.