Lakshman Achuthan is one of the most “notorious” voices in economics.
Achuthan, the head of the Economic Cycle Research Institute, predicted in 2011 that the U.S. was doomed for a recession. And in late 2012, he said that the recession started in mid-2012.
This morning, Achuthan is appearing with Bloomberg Surveillance with Tom Keene defending his assessment.
“You reaffirm your call right?” asked Keene.
“Correct,” said Achuthan.
“First off, all you have now is preliminary numbers,” he said of the BEA’s GDP figures. “All that stuff gets revised massively.”
“Secondarily, you cannot get away from the fact that 35-54 year olds have lost almost a million jobs since this jobs recovery began. That’s where you make your money. You don’t make your money as a kid. And you don’t make your money when youre about to retire. and that’s a problem.”
“We believe a recession began last year,” he added.
Achuthan argued that the behaviour of the Federal Reserve supported his call. Specifically, the Fed wouldn’t be maintaining its ultra-easy monetary policy if it wasn’t convinced the economy was very sick.
Achuthan notes that the NBER, the folks who date recessions, sometimes take up to two years before they call a recession.
He also added that the BEA also makes huge revisions to their numbers.
“Over that last few recessions, the downward revisions are on the order of 2% to 4%,” he noted.
Speaking of revisions, the BEA will be revising all of the GDP data since 1929 to include R&D as a category of investment. These new numbers will be published on Wednesday.
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