Achuthan Expects Another ‘Double Dip Scare’ for US
Below is a video of Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute (ECRI), talking about the economic outlook for the US. I profiled Achuthan’s views on a broad US slowdown when I wrote in May about why a global slowdown will hit by summer. Now that we are in Summer, both economic and earnings growth estimates are being cut. The question is “what should we expect going forward?” Achuthan answers this in speaking with Matt Miller, Deirdre Bolton and Lizzie O’Leary on Bloomberg Television’s "InsideTrack". He also also discusses corporate earnings.
Note that last year we had a slowdown which analyst Albert Edwards could foresee as far back as April. Throughout the summer, many people were using at the change in the ECRI’s leading indicators as a potential sign of a double dip. Achuthan repeatedly assured us there was no a double sip sign, telling Barron’s in June:
“While the plunge in WLI growth to a one-year low assures a significant slowing in U.S. economic growth in the coming months, the recent weakness has not lasted long enough to signal a new recession threat.”
When I wrote a note on recessions and recoveries in September, I mentioned that Achuthan thought we had even odds of a double dip. Eventually, the double dip threat faded. Achuthan was saying no double dip recession by October of last year even as the Fed started QE2 to deal with the slowdown.
For his part, Achuthan proved to be an accurate forecaster of the economy throughout that episode. Timing-wise, this dip is similar. I would say, though, Achuthan seems less optimistic this year than last. Take a look. I think this is a good segment.