The Economic Cycle Research Institute (ECRI) and its founder Lakshman Achuthan have been taking a lot of heat for maintaining an aggressive recession call for the U.S. economy.But that’s not to say that ECRI isn’t producing some interesting research and analysis.
Last Friday, Achuthan gave a presentation titled The Yo-Yo Years at Bloomberg’s Sovereign Debt Conference in Frankfurt, Germany.
The convergence of two cyclical patterns virtually dictates an era of more frequent recessions in developed economies. As a result, growth in developing economies is going to be jerked around more than people think, making for a good deal of cyclical economic contagion. In other words, we are now in the yo-yo years.
In short, these two patterns are 1) lower trend growth and 2) increased cyclical volatility.
Achuthan also notes that the idea of decoupling is silly as rising export/GDP rates imply more coupling.
He also articulates the idea of the “bullwhip effect” where changes in consumer demand have more amplified affects further along the supply chain.
You can download the presentation at ECRI’s website.
(h/t Doug Short)