ECRI says Recession Unavoidable

[Snidely Whiplash]

Sheesh. I knew things weren't great but I didnt expect this. Are the claims made (ECRI never having sent a false recession signal) correct?

“It’s Going to Get a Lot Worse”: ECRI’s Achuthan Says New Recession Unavoidable | Daily Ticker - Yahoo! Finance=

With all the negativity I see in the media, I guess we really can talk ourselves into a recession.

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[NYEXPAT]

Based on past history, I would agree but Warren Buffett said today otherwise!

 

[MasterBlaster]

Yes recessions are inevitable. The question is only of when they will occur.

I also predict rain in our future is inevitable.

 

[brewer12345]

You know the old saw: Economists have predicted 9 of the last 4 recessions.

Discount anything on the "daily ticker" by at least 75%.

 

[Snidely Whiplash]

You know the old saw: Economists have predicted 9 of the last 4 recessions.

Discount anything on the "daily ticker" by at least 75%.

Thats why I inquired as to the truthfulness of ECRI's claim to have never sent a false recession signal. I'm not that familiar with ECRI or the Daily Ticker.

 

[DallasGuy]

What he's saying seems almost obvious to me. Seems like there's much more bad news out there than good.

 

[brewer12345]

ECRI is legit, but is only expressing an opinion. Daily Ticker is a soapbox for lunatics.

 

[haha]

Daily Ticker is a soapbox for lunatics.

Absolutely, like recent guests Robert Shiller and Mort Zuckerman.

Ha

 

[brewer12345]

Absolutely, like recent guests Robert Shiller and Mort Zuckerman.

Ha

Daily Ticker seems to want to showcase only the most extreme viewpoints, regardless of where they come from. A steady diet of that is not healthy.

 

[Tadpole]

Must be that copper thing. (I never heard about the copper indicator before a couple of days ago. Now it is all the rage and seems like everyone, but me, knew.)

 

[wildcat]

I recall the ECRI guy being on CNBC after the big collapse. We started to rally off the lows and I was quite skeptical at the time (thinking it was just a dead cat bounce). ECRI's message was very positive at the time while other "experts" were saying stay away. He seemed to have nailed most of the ride up for what it's worth.

 

[FUEGO]

The guy admits that last summer ECRI was saying "No Double Dip". Now he's saying we are either in recession or Q4 is the recession.

And as the ECRI guy says, we are at 2 years into the expansion cycle and the great majority of historical expansion cycles only last about 3 years. So a prediction of a recession at this point is just playing the odds.

I guess it isn't that surprising given we are 15% off the recent market highs.

 

[ER Man]

It does not matter if we go into a Depression or a Recession. What matters is your own Economy.

 

[Snidely Whiplash]

Apperantly he was making the rounds Friday. CNBC link if they are any more legitimate than Daily Ticker:

http://media.cnbc.com/i/CNBC/compon...s.cnbc.com/stickers/partners/cnbcplayershare/

I have yet to read anywhere that his previous calls, premised on the company's leading indicators, have given a false recession signal.

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[Snidely Whiplash]

the great majority of historical expansion cycles only last about 3 years. So a prediction of a recession at this point is just playing the odds.

Really? Recessions are historically that frequent? Assuming they last a year and expansion cycles average three years we then have recessions every four years or so?

As bad as I (and my portfolio) felt during the "Great Recession" I was hoping for a bit longer until I had to go through it again.

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[brewer12345]

Really? Recessions are historically that frequent? Assuming they last a year and expansion cycles average three years we then have recessions every four years or so?

As bad as I (and my portfolio) felt during the "Great Recession" I was hoping for a bit longer until I had to go through it again.

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The history is kind of split. Prior to the late 80s or so, expansions typically lasted about 3 years and then you had some kind of recession. In the last 20 or 25 years, we have had longer expansions (6 or 7 years). If you average it, you get something like 4 year averages for expansion time.

I would say that circumstances are unusual vs. the historical record in that the damage done by credit crunches tends to be longer lasting. Whether we technically lapse into recession or not is unclear (I think probably not, but its possible). Instead, we are likely to go through a prolonged period of low growth as the damage done slowly heals. I am not really expeting robust growth until 2015 or so and that has been my expectation for some time.

That said, look at the economic data. Lots of mixed signals, but the mix has turned somewhat more positive lately. There is a ton of fear in the market after the big swoon a couple years ago, but as far as I can tell it seems overdone.

 

[NYEXPAT]

Really? Recessions are historically that frequent? Assuming they last a year and expansion cycles average three years we then have recessions every four years or so?

As bad as I (and my portfolio) felt during the "Great Recession" I was hoping for a bit longer until I had to go through it again.

.

Fortunately in Peru (several other countries as well) we skipped (the Great Recession) and although the stock market suffered some, home values have increased by 300% over the past 4 years.

The government is telling everyone to brace for a "Global Slowdown" as opposed to a recession and exporters are shifting away from the USA (Now tied with Switzerland) as our second largest export market after China.

I also subscribe to the low growth theory's currently in vogue. However, unless there is major "political" and "structural" change the USA will be stuck in stagnation for at least a decade.

 

[REWahoo]

Fortunately in Peru (several other countries as well) we skipped (the Great Recession) and although the stock market suffered some, home values have increased by 300% over the past 4 years.

Wow. Real estate bubble in the making...

 

[M Paquette]

One thing to keep an eye on...

If you punch up a chart of a typical stock market index like the S&P 500, and overlay the periods when the economy was in recession, you'll see something interesting. Mr Market tends to hit his low at or just before the start of a recession.

It's that whole forward-looking thing...

 

[MichaelB]

One thing to keep an eye on...

If you punch up a chart of a typical stock market index like the S&P 500, and overlay the periods when the economy was in recession, you'll see something interesting. Mr Market tends to hit his low at or just before the start of a recession.

It's that whole forward-looking thing...

I beg to differ. Looking at the last 5 recessions as called by the NBER: 12/07, 3/01, 7/90, 7/81, 1/80, the S&P at the beginning and end of the month, and the S&P 3 and 6 months later, it is lower in 9 of those 10 moments. I would agree that the stock market has already begun it's decline by the recession start date. These are incredibly difficult to time, and once fear begins to dominate one's investing outlook that probably means it time to buy.

In this case unemployment is already quite high so a deterioration may not have the same big impact as in the past. On the other hand, the "idiots in charge" factor characterizing politics around many western developed economies add a new dimension to portfolio risk. But it does keep us busy around here

 

[Snidely Whiplash]

 

[Snidely Whiplash]

And this one makes me feel kind of cheated. I never got higher than optimism this time around.

 

[M Paquette]

I beg to differ. Looking at the last 5 recessions as called by the NBER: 12/07, 3/01, 7/90, 7/81, 1/80, the S&P at the beginning and end of the month, and the S&P 3 and 6 months later, it is lower in 9 of those 10 moments.

My bad. I probably need to adjust my medications. Less tonic, more...

I just re-checked. The S&P 500 establishes a trough before the END of the recession, where the recession is declared by the NBER. D'oh!

http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0801/document/dd010708.pdf

That still makes it a pretty reasonable leading indicator. Beats waiting months for the 'Yeah, the revised updated GDP was negative back there', or the timely declaration from the NBER a year later.

My personal SWAG is that if we are in a recession now, Mr. Market is busily putting in the low here plus or minus a few weeks. Am I trying to time it?, Oh, heck no! I know better than to trust some doofus analyst like myself. I make a point to always ignore my timing advice, because I could be wrong, and it just takes one goof to turn market timing into a losing game.

 

[eytonxav]

My rose colored glasses came off months ago. I see no green shoots in the global economy and only a lawn that is getting browner by the day. My port went into the red this week for first time this year and I'm about 60% cash. Now I am hearing CEOs are projecting more layoffs ahead, what a disaster for young and old alike.

 

[MichaelB]

Less tonic, more...

Ahhh, yes.

I just re-checked. The S&P 500 establishes a trough before the END of the recession, where the recession is declared by the NBER.

That sounds more like it.

That still makes it a pretty reasonable leading indicator. Beats waiting months for the 'Yeah, the revised updated GDP was negative back there', or the timely declaration from the NBER a year later.

My personal SWAG is that if we are in a recession now, Mr. Market is busily putting in the low here plus or minus a few weeks. Am I trying to time it?, Oh, heck no! I know better than to trust some doofus analyst like myself. I make a point to always ignore my timing advice, because I could be wrong, and it just takes one goof to turn market timing into a losing game.

We could be in for a decade or two of economic disaster, perhaps the end of the US way of life, the decline of the west, or even (gasp) the demise of capitalism as we know it. A new ice age is possible. Certainly the EU will cease and everyone there will revert to their prehistoric way of life.

Or, things will turn back up like they have every time in the past. A little more slowly, perhaps. Whatta I know?