Earlier we posted the video of ECRI’s Lakshman Achuthan on CNBC this morning, in which he was asked what, exactly, is inside his famous Weekly Leading Index, which according to him is warning of a guaranteed recession.
Achuthan’s prediction is interesting for a couple reasons: Most notably, people say he has a pretty good track record. This latest call has been particularly controversial because ever since he made the call, the general mood of the economy and the market has improved.
But it is frustrating that nobody knows what’s in the ECRI Weekly Leading Index, a point that Steve Liesman tried to hammer him on this morning.
Anyway, after we posted the video, NYT stats god Nate Silver tweeted bluntly to us: Achuthan is a charlatan.
After Silver tweeted that we pinged him (via DM) for further elaboration, and we also emailed Achuthan for comment, and we haven’t heard from either.
So we figured we’d just take this public and start the fight now, and get one of the two to follow up.
UPDATE: SIlver has tweeted out a few more points regarding Achuthan and his forecasting technique.
Most attempts to make macro forecasts based on a soup of leading indicators have failed miserably.
Granted, much macro forecasting is pretty terrible. But research suggests that judgmental methods are less bad.
Mostly though I think it’s a huge red flag whenever a forecaster can’t or won’t explain his model.