Despite the short term sentiment that has gripped the market in recent weeks that the US economy will avoid a recession, Lakshman Achuthan of the ECRI is adamant that nothing has changed since his September 30th call that the US economy is slipping into recession. What is amazing in this clip is the idiocy and belligerent nature of Steve Leisman, who badgers Achuthan for a single indicator that is pointing to recession. Achuthan refuses by pointing out that no one leading indicator is particularly important in and of itself but rather the contagion across a wide variety of indicators. As John Hussman noted a few weeks back;
In our experience, most economists and Wall Street analysts seem to analyze the economy as what I’d call a “flow of anecdotes” – weekly unemployment claims did this, retail sales did that, we got a positive surprise here, and so forth, without putting that information into any real structure and without knowing which data points actually matter or in what combination. In contrast, good economists think about the economy as a system – where multiple sectors interact. We tend to use words like “equilibrium” and “syndrome” when we talk about economic data – emphasizing that the best signals involve a whole conformation of evidence, not one or two indicators, where the data – in combination – captures a particular signature of recession or recovery.
I never really bought into the conspiracy theory that CNBC is always trying to amplify the bullish case and suppress the bearish. To me they are little more than a mouthpiece for Wall Street, which by nature has a bullish outlook. However it is hard to escape the conclusion that CNBC is at least trying to talk down the bearish view of the economy when looking at this clip. Perhaps Achuthan is right when he says that Leisman talks to too many economists, that as John Hussman says, analyse the economy as a series of anecdotes without understanding how they fit together. I really hope they have Achuthan on again with Steve Leisman next year when recession is obvious to all, even to the chukkle heads on CNBC.