The key focus of Cashin's daily letter today has to do with the steadfast resilience of the ECRI's Lakshman Achuthan, who called for a recession back in September, and when asked yesterday if he reaffirms his call, he says "Consider it reaffirmed." He then proceeds to list out the "key, hard facts" summarizing the litany of truth as follows: "The economy is weaker today than it has been in 21 months." And scene.
From UBS Financial Services:
“The Facts Ma’am. Just The Facts” - That was the classic interrogatory posture of Sgt. Joe Friday (Jack Webb) in the popular and long running radio and TV series, “Dragnet”. Just the facts was the posture taken by Lakshman Achuthan of ECRI in two recent interviews on the economy.
Last week Becky Quick interviewed Achuthan to see if he had adjusted or tempered his call that the U.S. was headed into a recession. That interview created enough of a stir that Bloomberg called him in for an interview on their network. We don’t have the transcript on Becky’s interview but here’s a bit of Achuthan’s Bloomberg interview:
Q: Lakshman, in three years there has not been a more anticipated set of interviews than with you today. Reaffirm your recession call.
A: Consider it reaffirmed, and let me explain why. Since our recession call five months ago, the definitive, hard data used to determine official recession dates have gotten worse, not better, despite the consensus view that things have been improving since we made that call in late September.
Q: Is the beginning of a consumption slowdown apparent?
A: Let’s go to those key, hard facts. GDP growth, year-over-year, peaked in the third quarter of 2010 at 3.5%. By the second quarter of 2011, it had fallen to 1.5% and it’s basically flat-lined from there. It has not reaccelerated. It’s a similar pattern for personal income growth and it’s a similar pattern for the broad measures of sales growth. As of January, when you look at industrial production growth, year-over-year, it has now declined to a 22-month low. Taking all of these key aggregate measures of output, jobs, income, and sales, putting it into our Coincident Index, the growth rate has now dropped to a 21-month low. The economy is weaker today than it has been in 21 months.
There’s more to the interview but you get the gist. Given a chance to modify his stance in the face of new, apparently improving data, he declined. He’s sticking with his call and that bears watching, given the excellent record of ECRI.