Bob Carlson

March 19, 2012

Recession Call Stands

Filed under: Economy — Bob @ 9:37 am

The Economic Cycle Research Institute made issued a call last fall that a recession was on its way to the U.S. The ECRI composed its own index composed of a number of indicators (it won’t reveal). The call’s been controversial since economic data has improved in the U.S. since that time. This hasn’t moved the ECRI at all. It defends and explains its call here. The basic point is that the data used by ECRI is true leading economic data, while the data that’s been positive and generated all the optimism is either coincident or lagging data.

Let’s start with the current state of the economy. A couple of weeks ago, we publicly highlighted ECRI’s U.S. Coincident Index (USCI). It’s important to understand that the USCI isn’t a random concoction of data, but rather the gold standard for measuring current economic growth, as it summarizes the key coincident economic indicators used to determine the official start and end dates of U.S. recessions; namely, the broad measures of output, employment, income and sales. So when USCI growth is in a downturn (bottom line in chart), it’s an authoritative indication that overall U.S. economic growth is actually worsening, not reviving.

No Comments

No comments yet.

RSS feed for comments on this post. TrackBack URL

Sorry, the comment form is closed at this time.

Powered by WordPress