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This Is The Chart That Makes ECRI Scream Recession
Despite signs that the economy is recovering, research firm ECRI has held to bearish predictions for the U.S. economy.
ECRI co-founder Lakshman Achuthan spoke to Bloomberg's Tom Keene this morning to defend his recession call amid an onslaught of criticism.
Achuthan provided a deeper look at how exactly ECRI makes its predictions, saying that it focuses on year-over-year indicators for output, employment, income and sales, and the consumer confidence index.
In particular, he pointed to the relationship between year-over-year consumption and employment as perhaps the clearest sign that the U.S. is headed back into a recession.
"People need to understand the sequence," he said. "I think the hope is that jobs growth will increase consumption in coming months, but in fact jobs growth follows consumption...There are many instances in which job growth precedes a recession."
If we look at a graph of these two indicators, it is clear that past U.S. recoveries have virtually all relied on consumption growth... and that consumption growth is slowing down. Read » | | | | | | |
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