Photo: Bloomberg Television
Lakshman Achthan, the man behind the Economic Cycle Research Institute, is sticking to his controversial recession call on the U.S. economy.He recently sat down for an interview with Morgan Stanley Smith Barney’s Charles Reinhard. The whole transcript can be found in this months’s On The Markets.
Here are some highlights:
CR: Has that recession already begun in the US?
LA: The median recognition lag after a recession begins is about half a year. After the last recession began, it actually took nine months before the consensus view accepted the reality, especially since we had clearly positive real-time GDP readings for the first half of 2008 that were later revised downward.
When we review the year-over-year growth rate of the US Coincident IndicatorIndex, which includes broad measures of output, employment, income and sales, we find it to be in a clear, cyclical downturn. That is an authoritative indication that overall US economic growth is actually worsening, not reviving.
CR: What do your indicators say about US home prices, going forward?
LA: What we are seeing looks like an upturn in the year-over-year growth rate of our US Leading Home Price Index. The implication is that home- price growth will turn up in fairly short order, meaning that the level of home prices is then likely to start stabilizing.
CR: What about inflation?
LA: Inflation is fairly tame. The US Future Inflation Gauge remains clearly below the highest [rate] seen last spring.
Notwithstanding high gas prices, underlying inflationary pressures are relatively restrained.