Wednesday, May 9, 2012

US Headed Into a Recession by Mid-2012

According to Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) the US will be sliding into a recession by mid 2012.  This is basically the same view held by A Gary Shilling in a set of 5 articles recently published at Bloomberg.  Not that I am near as smart as either of these gentlemen, but I have thought the same thing since last fall, that the US would slide into a recession sometime in 2012.

ECRI uses business cycle research to identify leading indicators that can forecast changes in the direction of economic cycles.  I find it interesting that economic cycle research is not commonly taught in economics programs at the University level.  In addition Alan Greenspan questioned whether or not the cycles existed while he was chairman of the Fed.  However, the NBER uses cycle research, Ben Bernanke watches the cycles, and businesses commonly follow cycle forecasts.  I personally believe that economic cycle research is one of the best kept secrets in our understanding of the economy.  You are encouraged to see the Achuthan video at ECRI.  The video takes less than 10 minutes to watch.

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