Achuthan: The US will be in recession by the end of next month

Lakshman Achuthan is sticking to his call that the US will enter recession in the second half of 2012. He spoke to CNBC’s Squawk Box crew about it this morning. Take a look.

Note: Achuthan is right about the NBER’s definition of recession. It is not back to back quarters of a negative change in GDP.

A recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak. During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year. Similarly, during an expansion, economic activity rises substantially, spreads across the economy, and usually lasts for several years.


The Committee does not have a fixed definition of economic activity. It examines and compares the behavior of various measures of broad activity: real GDP measured on the product and income sides, economy-wide employment, and real income. The Committee also may consider indicators that do not cover the entire economy, such as real sales and the Federal Reserve’s index of industrial production (IP). The Committee’s use of these indicators in conjunction with the broad measures recognizes the issue of double-counting of sectors included in both those indicators and the broad measures. Still, a well-defined peak or trough in real sales or IP might help to determine the overall peak or trough dates, particularly if the economy-wide indicators are in conflict or do not have well-defined peaks or troughs.

Also note that the last recession in the US ended 3 years earlier in June 2009.

  1. David_Lazarus says

    Achuthan is spot on about the problem being about incomes. I do think that the commentary about housing not being the shock is wrong. Housing is only staying as high as it is because of Fed policy, if there is another recession those that are barely coping will walk away that will mean more foreclosures. My analysis is that the US will have a very weak economy for years basically bouncing along a bottom with regular recessions as weakness in the markets is exposed. 

  2. Mca67 says

    Achuthan conducts himself brilliantly. The anchorman, who needs to learn to shut it, doesn’t. 

  3. Rob says

    Due to the ending/shortening of the extended unemployment compensation programs, folks are going to go off the government rolls in droves. They’ll have no other choice but to accept any and all available employment just to survive. That will put further downward pressure on wages in the marketplace. 

    1. David_Lazarus says

      That is the objective of neoclassical economists. To make the labour force so flexible that management can take all the rewards of growth. 

      1. Obama Moron says

        That’s why I joined management!

  4. Inter Alia says

    I coud not believe the impertinence of the anchormen.  What a bunch of bozos!

  5. Michael Graham says

    I really hate when people interrupt people when they are trying to explain something. These anchors are just rude!

  6. Enrique Gonzalez says

    They are not anchormen, they are parrots. Brainless parrots. They have together 3 microphones, but the person who really has something interesting to say to investors, has just 1, and is almost useless because of ineducated anchormen.

    Great CNBC.

  7. dont believe there lies says

    CNBC are ultimately retarded and the robot hosts seem to be trying to push/instigate the idea its a bad time to go into the stock market and are willing it to crash.

    1. David_Lazarus says

      I do think that stock markets are overvalued by any long term measure. Elsewhere I have criticised the anti retail investor actions of the banks with front running high frequency trading and safe harbour provisions that punish investors so I would be very cautious about stock market investment in the US.

      Bloomberg is just as bad in always looking for the next trend/bubble.

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