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April 19, 2014

The Next Recession is…Now?

Despite renewed efforts by the Federal Reserve to boost the economy and signs of a housing market rebound, Lakshman Achuthan makes the case that the US has already entered the next recession.

“In the current cycle retail sales have already peaked back in March 2012 and, according to the household survey, employment has declined for the last two months, and for four of the last six months. Mind you, the household data is revised a lot less than the payroll jobs data and also tends to lead it a bit at cycle turns… there have been revisions showing even weaker income growth going back a few months, followed by some apparent recovery recently. As with some of the other coincident data, this series will come under significant revision in the months (and years) ahead.”

“For the U.S., the economy is recessionary despite all of the extraordinary efforts by the Fed over the past four years. In that sense, one might argue that, as far as the economy is concerned, the Fed’s actions have become increasingly ineffective. The plunge in the velocity of money to record lows tells us that the Fed is pushing on a string – so no matter what they do there will only be limited traction. Basically, the recession has to run its course.”

  • Chredon

    This guy has been predicting a double-dip recession for over a year, and it looks to me as though he’s grasping at straws to try to salvage his reputation. If no recession materializes, it’s going to make him look either partisan or inaccurate, either of which would be bad for his status in the economic community. The indicators to which he is pointing are one-month fluctuations in measures that have been doing well all year. I think he also needs to stick with the actual definition of a recession – when GDP growth is negative. I see no indication of that happening.

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