ECRI Sticks with Recession Call on CNBC; More than a Bit of an Exaggeration by Achuthan to Make His Call?
ECRI's Lakshman Achuthan sticks with his recession call. This time his call is based on coincident indicators as the following video shows.
CNBC has an interesting feature where you can click on any snip of generated text and it will take you to that spot in the interview. However, do it a couple times and it hangs.
Here is the link to a complete transcript if interested: ECRI Sticks With Recession Call
More than a Bit of an Exaggeration by Achuthan
At one point Achuthan says "I want to be first on this. On the right-hand side of the chart, that's a 21-month low. It has not -- you haven't had a decline like that in the past 50 years without a recession following in short order, okay?"
Well - Not OK.
Annotations in Red by Mish.
The above chart, clipped straight from the CNBC video, was obviously prepared in advance (I have no problem with that). However, Achuthan's claim based on that chart is clearly preposterous.
I count three instances between 1990 and 2000 where ECRI coincident indicators flagged a recession by the methodology Achuthan cited.
I have numerous other problems historically with ECRI claims, including their alleged "perfect" track record. Please see A Look at ECRI's Recession Predicting Track Record for details.
This time, I happen to think Achuthan has very valid points. However, once again, Achuthan has a hard time articulating them in a purely factual manner in spite of the fact he is clearly bright and articulate.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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