ECRI's Achuthan: "The US Is In Recession Already"

Tyler Durden's picture

Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, spoke with Bloomberg Television’s Tom Keene today and said that, "What we said back in December was that the most likely start date for the recession would be in Q1 and if not then, by the middle of 2012. I’m here to reaffirm that. I think we’re in a recession already." And just like us, the anagrammatic ECRI economist believes that "It is not all about GDP. It is about jobs. It is about income and sales. A recession is a vicious interplay among output, input, employment, income and sales" noting that recessions don't generally start with a cliff (that everyone looks for) adding (rather ominously): "there is this belief that somehow government or a central bank will stave off a recession. For the last 220 years, you do some history with Hamilton, which ended in a duel by the way... you have had 47 recessions. Why are we going to avoid the 48th?"

ECRI has turned south...

Achuthan on whether he can reaffirm his recession call from last year:

“Yeah…I think a lot of people forget what our call was. What we said back in December was that the most likely start date for the recession would be in Q1 and if not then, by the middle of 2012. I'm here to reaffirm that. I think we're in a recession. I think we’re in a recession already. As I said back there, it is very rare that you know you're going into recession when you’re going into recession. It often takes some big hit on top of the head. In the last recession, it took Lehman to wake people up and the recession before, it took 9/11.”

On how ECRI defines recession:

“It is not our definition. It is the definition of what a business cycle is, which was established by my mentor Jeffrey Moore’s mentor Wesley Mitchell back in the 1920s. What is a recession? It is not a statistic; it is a process between production, employment, income and sales. When you look at those four measures, they are rolling over.”


“It is not all about GDP. It is about jobs. It is about income and sales. A recession is a vicious interplay among output input employment, income and sales. When you look at 2001, you can’t find two negative quarters in a row, yet you lost 3 million jobs. Or half the value of the NASDAQ. How are you going to tell someone that wasn’t a recession? When you look at the data today, you see that industrial production is off of its April high. Manufacturing and trade sales, much broader than retail sales, is off its December high. Real personal income growth, which does not always go negative during a recession, has been negative for several months so it is consistent with a recession having already started.”

On what the relative optimists get wrong in economics today:

“I think there is this belief that somehow government or a central bank will stave off a recession. For the last 220 years, you do some history with Hamilton, which ended in a duel by the way…you have had 47 recessions. Why are we going to avoid the 48th? Here we are in the wake three years out of the last recession. You see this leading indicator. It leads, it is the drivers of the business cycle and it is doing this bumping down. People look it that and they say, each time they throw in some money or do something, you get less for it. I am surprised given the trillions of dollars spent around the world that that indicator is as weak as it is. That is a recessionary reading.”

On why the U.S. is struggling:

“We have entered these so-called yo-yo years. We have been seeing weaker and weaker expansion since the mid 1970s. We have not been freaked out by it because the business cycle has been pretty mellow over the last 20-25 years. Until now. So if you have a more volatile business cycle and low growth, you get more recessions and you start to destroy people's ability to earn. In particular, when we talked slower expansion, we’re not talking GDP, we're talking jobs, too. In particular you're seeing no jobs growth.”

On how globalization plays into indicators:

“There’s a lot of things in there. Globalization is part of it. There’s a lot of one offs that have occurred in the last decade. The falling of the iron curtain. The emergence of China and India. A lot of productivity growth. A lot of aging of the population. So there is a lot of a factors in here at work. But when you are competing, as we are globally, companies are trying to squeeze their costs. People are a big part of that. What you see is what is alarming right now, people that are in their prime earning years, which is roughly from 35 to 54, over the last two years, they have lost jobs. Net jobs have been lost for that cohort of the American job market and that is when you're supposed to make your money.”

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Cursive's picture

I've disagreed with much of Laksman Achuthan's analysis since 2009 because he foresaw a "recovery" that was more Potempkin than real.  That said, congratulations to him for sticking to his guns.  Ceteris paribus, if you have less people working, you will have less consumption.  Deficit spending has complicated that, but over a long enough period, it's unsustainable.

CClarity's picture

Or as Roubini said, "Levitational force of policy easing can only temporarily lift asset prices as gravitational forces of weaker fundamentals dominate over time."

vast-dom's picture


I should be working's picture

You mean July 2008, right?

And the S&P was pretty far off its highs by July, although that was nothing compared to what was coming.

I think ECRI just hopes if they say the R word on Bloomberg enough times it will come true.

“Yeah…I think a lot of people forget what our call was. What we said back in December"

First, your recession call was in August, second you said imminent.


I don't know what the word imminent means to most people, but to me it does not mean one year later...


The Monkey's picture

By the way Ben, good luck, you're going to need it.

Better pull out the Benjamin Strong playbook ASAP. We need a bigger top to short.

bshirley1968's picture

THAT is a great question.

Peter Pan's picture

He THINKS we are in recession? Well let me assure him that over 300 million Americans are sure of it,

Dr. Richard Head's picture

Taking away the government sponsored viagara injections would show we never left the recession in the first place.  Using government statistics (faulty ones at that) over 41 consecutivbe months at 8% plus unemployment ain't no recovery - this even AFTER a good splooge of stolen goods being shifted to the losers. 

Take away the viagara and we have had one limp dick economy since late 08.

dbomb12's picture

What a freaking genius this guy is, too little too late if he was actually researching the truth he might have missed the fact we never came out of the recession that started in 2008 less stimulus and massive Govt spending and Fed manipulation we have not had any real growth since the downturn. Dumb asses

jeff montanye's picture

lakshman achuthan and john hussman are among the very, very few professional economists/analysts that called a recession last year.  it is still far from "priced in" as we will soon see.

The Monkey's picture

Don't forget Gary Shilling and Lacy Hunt.

Shilling has absolutely killed it sticking with the long bond. What a bad-ass. Best strategist in our lifetimes.

Shilling's 4 horseman trade: short stocks (US financials particularly), short commodities, long treasuries, long dollar index.

earleflorida's picture

currently over 150 million don't see a recession?  

Rainman's picture

less than a hundred see a balance sheet depression ?

Manthong's picture

Just wait till the real numbers come in.

earleflorida's picture

the 'real' numbers we've been getting for the last 30 odd years?

The Monkey's picture

Precipitious drop in everything coming to a theater near you.

Aziz's picture

Solid research.

Further confirmation:

Joe Wiesenthal: "THIS IS HOGWASH!"

Yep, definitely solid research. 

CClarity's picture

The credit markets and bond markets tell the story.  Look for deflation in assets such as stocks and real estate that aren't "productive", more disruptive technologies in companies that will be "productive" and invest accordingly.  And yes, investing in the near term should include some equity shorts and puts and physical metal holdings.

Breezy47's picture

It's still the beginning of the depression...that started late 2007...

Dr. Engali's picture

No it started in the 70s . They papered it over with debt and pulled future growth forward for years. They outsourced the rest of the economy, all that's left are over weight bottom feeders who can't consume enough.

King_of_simpletons's picture

We never really came out of the 30s great depression. The "recessions" of these past decades have been mere pull-backs in a secular bear market that will last until 3082AD, which is when the mayan lost calendar will be discovered by the 3rd great great great great grandkid of J.Lo.

Whoa Dammit's picture

"I think we’re in a recession already.

Dude's a little slow witted. We have already been in a recession/depression for what seems like half of my lfe.

Dr. Richard Head's picture

For an 8 year old, you are quite perceptive. 

Breezy47's picture

Now that made me laugh Dick. You don't mind if I call you Dick, do you?

LoneStarHog's picture

Hey, Lakshman Achuthan, do you actually get paid for this CRAP?  The USSA never got out of recession, but went directly into a papered-over depression.  Where in the hell do you Whore Street clowns come from and WHY are you interviewed and published?

jeff montanye's picture

to repeat:  achuthan took and still takes a lot of criticism from the sell side and wall street generally for his perhaps now prescient call last year for a 2012 recession.  he is on the radical side of the profession currently for his much more bearish analysis of the world economy.  as we know, zero hedge is not the wall street journal/new york times.  in the latter world, where achuthan operates in part, his views were greeted with derision when first offered.

Jlmadyson's picture

I wonder if this is when we get to start hearing the talking heads debate if this is a double dip or not years after we supposedly got out of the last.

Fun times ahead.

dojufitz's picture

Its not a recession....its a in Australia evey week we read about 1000 of jobs loses and company that have been around for years are broke. It is serious.

King_of_simpletons's picture

And yet, the housing prices are sky high and climbing. Howz that ? A huge bubble in housing there and in Canada.

Seasmoke's picture

they also had a few hopeful years in the middle of THE GREAT DEPRESSION .........stupid lying fuckers

TrumpXVI's picture

L.A. is a guy who explains things in understandable language.  It was worth it to teach myself how to pronounce his name.

The key date in which the deterioration of the financial fortunes of the American middle class begins seems to keep coming back to c. 1974.

Hmmm, I wonder what happened then?

Oh, that's right, americans had to start paying much higher prices for energy.

I wonder what has happened since 2000?  

Oh, that's right, americans have had to start paying MUCH higher prices for energy.

Couldn't have anything to do with all our problems; Nah!

Diogenes's picture

Stock market peaked in 1969 at 1000. Did not break out until 1982. The economy went to shit in 1969.

adr's picture

The economy peaking in 1969 wouldn't have anything to do with the birth of the Great Society in the 1960s would it?

Nah, paying off the ghetto to pop out babies by the millions while collecting checks, as long as they voted Democrat, bringing about the 1970s ghetto expansion, drug explosion, food stamp trading inner city politician millionaires did wonders for our society.

Spending trillions should always result in massive economic expansion, Krugman told me that.

Just some highlights from '64 to '69

  • The Elementary and Secondary Education Act provided major funding for American public schools.
  • The Voting Rights Act banned literacy tests and other discriminatory methods of denying suffrage to African Americans.
  • Medicare was created to offset the costs of health care for the nation's elderly.
  • The National Endowment for the Arts and Humanities used public money to fund artists and galleries.
  • The Immigration Act ended discriminatory quotas based on ethnic origin.
  • An Omnibus Housing Act provided funds to construct low-income housing.

Did any of that actually make the country better?

ZeroAvatar's picture



"They took the religion out of the schools and put the niggras in the schools".


alfred b.'s picture


   What else would you expect when a banking cartel holds more power than a sitting president, and I use that title loosely.   This bankster syndicate loaded with crooks, corrupt regulators, lobbyists and a laughable congress is matched against a cardboard cut-out of a prez. and a dim-witted administration.

   A total collapse is probably the best possible outcome!


Jason T's picture

I love this balsy guy.   A renegade.

earleflorida's picture

and just how do you fix a recession? Why - doing a 'cold and frosty krugman' at the keynesian summerfest retreat adjacent to '33 Liberty Street'...

such 'subliminal' nonsense!

MunX's picture

In real terms we have been in decline since 2001. But who cares about anything real anymore?

Newsboy's picture

It's early 1933, innit?

proLiberty's picture

Many Austrian economists have noted that Keynes never described how the economy should function normally, so of course his theory will be worthless in diagnosing the problems, especailly when they are caused by Keynesian money-printing.

We will stop having boom-bust cycles when we stop attempting to manipulate the supply and time value of money, both of which cause people to make erroneous long term investment decisions.  Futher, from a moral standpoint, Keynesian economics presumes that government owns not only all wealth, and all future wealth, but it presumes the power to manipulate the money value of assets in an attempt to induce people to assume risk they would not normally do.  

This can be seen at this very moment in the deliberate policy of the Federal Reserve to suppress the time value of money to nearly zero, and to force retired people who used to be able to live on savings to take more investment risk in the instruments they purchase.

And Keynesians make no bones about the manipulation.  They only have twinges of guilt and doubt when they fear that the manipulation has gottn too grand.  To them, the problem is only the bad effects that might happen, not the moral faillure  of the destuction of property they are cheering on.



yrad's picture

how is JPM in the green right now?

Panafrican Funktron Robot's picture

There is still somehow a decent supply of muppets.

I should be working's picture

Don't worry just a quick short covering rally probably.

Why does anyone worry about a stock being up for a day?  I'm sure Lehman had some up days too, wouldn't make me want to buy it.