Despite a slew of economists calling for 3% growth in the U.S. economy, Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) is standing by his recession call of a few months ago (hat tip, Mish). I first covered ECRI's prediction in Batten Down The Hatches, A Big Storm's Coming (October 3). And last week, I reported on the views of John Hussman in Have We Avoided A Recession? Hussman puts the odds of a new recession at about 85%.
We'll know within a year whether these predictions, which are based on separate analyses of economic indicators, are indeed correct. I don't believe anyone can predict events in this economy with much precision. Conditions are very different, and much worse, than they were in the 66 years since World War II. We did not simply experience a particularly nasty downturn in the so-called Business Cycle in 2007-2008. Various problems (e.g. the end of debt-based growth, permanently high oil prices) ensure that America has entered very long period of stagnation or depression. We can be reasonably certain that the worst still lies ahead of us.
Here's the Achuthan interview on Bloomberg television.
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