The ECRI maintains its recession call in the face of improving economic data, saying the Great...


The ECRI maintains its recession call in the face of improving economic data, saying the Great Recession has messed with seasonal adjustment patterns, skewing recent headline data to the upside. "Can unprecedented, concerted global monetary policy action repeal the business  cycle ... it cannot."

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Comments (32)
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    King Canute comes to mind...(Google him)

     

    The should have just said - this time its different - that would sum it up.

     

    E
    15 Mar 2012, 09:58 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    A recession call at this point shows huge arrogant. We are right despite all the evidence to the contrary.
    15 Mar 2012, 03:08 PM Reply Like
  • torahislife
    , contributor
    Comments (400) | Send Message
     
    Time will tell if they are right or wrong, but they're smart enough to recognize an over-juiced market from economic reality. Kudos to your honesty ECRI!
    15 Mar 2012, 10:01 AM Reply Like
  • bbro
    , contributor
    Comments (11216) | Send Message
     
    ECRI...open up your black box...I guarantee ECRI is using seasonal adjustments too
    15 Mar 2012, 10:02 AM Reply Like
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    All I need to look at is the gasoline deliveries to know ECRI is correct.

     

    Also, to know that in NYS at least, all the new jobs that have been created since the recession ended are paying on average more than 40% less that the average pay of the jobs lost.
    15 Mar 2012, 10:10 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    All I need to do is look at the fact that US economy created a net half million jobs to know that you are wrong.

     

    No recession has proceeded by accelerating employment growth.
    15 Mar 2012, 03:08 PM Reply Like
  • Tack
    , contributor
    Comments (16267) | Send Message
     
    JT:

     

    Well, then, who's responsible for those ever-escalating auto sales, retails sales and corporate revenues, which keep climbing relentlessly? Apparently, not everybody's broke, or even close.
    15 Mar 2012, 04:32 PM Reply Like
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    but even if they are broke, they have a pulse.. just like they had a pulse during the housing bubble and were given loans they couldn't pay back.

     

    http://bit.ly/zAmSrV
    16 Mar 2012, 11:47 AM Reply Like
  • Tack
    , contributor
    Comments (16267) | Send Message
     
    JT:

     

    So, is your implicit claim that current overall corporate performance is based on overextended personal credit? (P.S. Personal-credit servicing costs are at 30-year low.)

     

    The problem is that some, especially the media, focus on the losers and think they control the economy's destiny. They don't and never have.
    16 Mar 2012, 12:16 PM Reply Like
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    I think to best summarize the US economy today, JM Smucker's 2011 results says it best. They raised prices on average, 16% for their products. Revenue was up 10% but volume was down 4%.

     

    Is that what a growing company is supposed to look like?

     

    We have an aggregate demand problem because real incomes are not keeping pace with cost of living because we're trying to issue credit to anyone and everyone again..especially Gov't, and that is leading to higher money supply and weaker dollar.

     

    Good point about focusing on the losers and getting misguided about the aggregate. I'm trying to stay focused on the aggregate picture.

     

    I.E.

     

    http://bit.ly/yy3btu
    16 Mar 2012, 01:17 PM Reply Like
  • williamwilliam
    , contributor
    Comments (681) | Send Message
     
    The Smuckers sales pattern is occurring in other industries like consumer electronics. Volumes go down, but margins and profits go up. It's actually a good business practice when you have a strong brand to fend off cheaper competitors.
    16 Mar 2012, 01:42 PM Reply Like
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    and real income down again.. http://bit.ly/xzfzcz
    16 Mar 2012, 01:43 PM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    When you see investment banks like Goldman and UBS downgrading economic growth forecast to between 1.8-2% and a Morgan Stanley strategist calling for 1% growth on CNBC.......

     

    ....maybe they are right.
    15 Mar 2012, 10:32 AM Reply Like
  • AlbyVA
    , contributor
    Comments (839) | Send Message
     
    Doubt it. Because those forecast lack the ability to gauge when markets will change direction. In a world that plays by the rules, I'm sure their Harvard Economic Models are 100% spot on. But in the real world where emotions factor into economic decision making at the Micro and Macro levels, economic forecasting doesn't play by those hard noses models.

     

    Think about this... The recession is more or less 4 years old and it has depressed auto sales in the process. People are holding onto their vehicles longer than usual. At some point, those vehicles are going to be so worn out, that folks are "forced" to purchase new models. That will in turn spur sales and manufacturing in the auto sector which in turn will spill over into other sectors of the economy. Its little things like that which those useless Goldman, UBS, MS models fail to factor in.
    15 Mar 2012, 10:56 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3527) | Send Message
     
    Alby,

     

    I agree with you that people are tired of the recession and want to live a little. However, will those with "worn out" cars replace all of them? If, slogging through the recession they realize they do not need a vehicle for each person in the household, will that keep them from being "forced" to upgrade? With less discretionary income due to higher costs of living (without inflation), will there be enough of a pop in auto sales and other consumer purchases to get thing rolling or just continue to sputter along? Unfortunately there is a gulf between recession and prosperity and that may be where we're sailing. IMHO
    15 Mar 2012, 02:37 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4003) | Send Message
     
    If your theory about old auto replacement is correct, the auto parts specialty retailers (e.g. AZO) would be showing signs of weakness, both in sales and stock price. I suggest a look at their last quarter and forecast. There is no indication of people dumping their clunkers based on AZO's performance.

     

    As car durability has improved enormously in the last decades, consumers can nurse them along into old age far longer than in previous eras.
    15 Mar 2012, 02:52 PM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    Poor Texan,

     

    That is a great analogy. From roughly 2002-2008 we as Americans have lived beyond our means and now we are dealing with austerity.

     

    I doubt we will see huge replacement demand for items like automobiles. $4 gasoline is causing people to live without that extra vehicle or choose a more fuel efficient option.
    15 Mar 2012, 02:52 PM Reply Like
  • 6M
    , contributor
    Comments (70) | Send Message
     
    I think the average person replaces their cars way too often. I use a 12+ year replacement cycle with mileage typically around 250-300K miles. I find that maintenance costs are minimal if I adhere to the manufacturer's recommended maintenance schedule. When money is tight, most people will figure out that the cheapest car to own is the one they already have. Most of those 4-8 year old cars are far from worn out.
    15 Mar 2012, 02:53 PM Reply Like
  • Placebo Investment Advice
    , contributor
    Comments (4003) | Send Message
     
    I agree. It's smartest to get a good quality car and take care of it. With the masses increasingly tuned into financial planning, as evidenced by the increasing popularity of Suze Orman and Clark Howard, I think it's a good bet that people will be holding cars longer as a durable societal trend. And that's great both for a person's finances and the environment--though bad for the new car industry domestically. The car companies are focusing on selling in BRIC countries anyway. They know that there best days are behind them in America.
    15 Mar 2012, 06:56 PM Reply Like
  • williamwilliam
    , contributor
    Comments (681) | Send Message
     
    If you spend some time on a car lot, you will discover most people have a totally different perspective on car ownership. One group sees monthly payments as never going away, and therefore need to drive the newest car within their budget. They go to the lot every six months to see if their loan balance has dropped enough to enable them to 'trade up' without an increase in their payment. Another group lives by the warranty cycle with a great fear of repair bills (because they have little money in the accounts - ever) and must trade-in their car one to two months before the warranty is up. Another group buys cars with their relatives credit - parents, siblings, and even children's. There's more groups with behavior that will surprise you.
    15 Mar 2012, 10:22 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    of course they are right. if they continue to reiterate the call. there will be a recession at some point in the future. 100% accurate.

     

    but

     

    they made the call last September and at that point they said it was a 6 month call. So here we are 6 months out and....no recession - 2% real gdp is not a recession...so maybe in the next 6 months...

     

    another thing they have done is they have started to talk about gas prices as a cause - but last September there was no specific prediction of gas prices as impacting anything it was all based on leading indicators. if you listen to him you hear him make other similar little adjustments and cherry picking regarding weather and home building and various factors as they relate to retail. I heard him speaking about how retail sales in January were slow but at the same time talk about home building being up - due to weather but ignoring car sales.

     

    Last time I checked - up is up. I don't need ECRI to tell me what I can see.

     

    E
    15 Mar 2012, 10:40 AM Reply Like
  • rshort
    , contributor
    Comments (29) | Send Message
     
    That's a lot of quotes attributed to ECRI/Laksman. What is your source?
    15 Mar 2012, 01:49 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1370) | Send Message
     
    E, if i recall, ECRI was on bloomberg in dec and said that they would be wrong if the recession didn't start by H1 2012.

     

    based on the most of the recent data it looks like a bad call. The two indicators i know of showing some signs of problems is train carloads and ceridian.

     

    I have a hunch that ecri will turn out to be right, but it's not based on much more than: they have a good record and they are the only credible outfit saying this...

     

    the essence of a contrary call is that you look stupid if you are wrong, and ECRI will look stupid if they are wrong on this one!

     

    Coincident and lagging indicators can sometimes give no clue to a recession start. Look at 1990, employment etc was growing pretty strong right to the month that the recession started. That's true of some other recessions as well.
    15 Mar 2012, 02:42 PM Reply Like
  • Tack
    , contributor
    Comments (16267) | Send Message
     
    Angel:

     

    Take a look at debt this week, Treasuries, debt funds and munis have gotten schmeistered, and there's more to come. It's not at all because anybody fears the underlying debt issues; it's because the long-awaited increase in rates and exodus from bonds, as safety plays, is finally under way. Gold is wilting, too. And, what are folks going to do with cash?

     

    Now, there are those who, undoubtedly in keeping in form, will prophesize that the increase in rates will kill the economy. But, as usual of late, they will be incorrect by 180 degrees, as we will see the rise in rates lead to a new increase in loan demand and an acceleration in bank lending, as postponing borrowers realize that the endless low-rate party is drawing to a close, and banks get happier at the prospect of better lending rates. These combined actions will further accelerate the economy, probably creating additional inflationary pressures along the way, as a side effect. All of it will be self reinforcing in the early growth phase.

     

    Now, somewhere along the road, quite a bit down the road, the Fed will have to elevate rates to forestall serious inflation, but that day is still a ways off in the distance. In the meantime, the economy will gather steam, as dormant money comes into play on all fronts.
    15 Mar 2012, 04:43 PM Reply Like
  • Econdoc
    , contributor
    Comments (2938) | Send Message
     
    Bloomberg interviews. He was on about 3 weeks ago and before towards the end of 2011. Go back and listen. It's easy to find them.
    15 Mar 2012, 09:07 PM Reply Like
  • brachiosaurus
    , contributor
    Comments (226) | Send Message
     
    they have a proprietary black box that got it wrong, and despite what they claim, has gotten it wrong before. they have a great marketer who is otherwise a macroeconomic lightweight.
    15 Mar 2012, 01:37 PM Reply Like
  • williamwilliam
    , contributor
    Comments (681) | Send Message
     
    There are sectors of the economy down Y-oY, although not publicized. Also, increasingly reliable leading indicators, like FCX tanking, are becoming visible.

     

    I suspect a recession will be reported after it occurs with revised data, likely in November/December after the presidential election. I very much doubt any recession will be formally recognized prior to that - no way.
    15 Mar 2012, 01:53 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    Pretty clear explanation by ECRI in the link. Remains to be seen if ECRI is correct, but would not count them out yet.
    15 Mar 2012, 03:44 PM Reply Like
  • Tack
    , contributor
    Comments (16267) | Send Message
     
    UI:

     

    Get serious.

     

    ECRI boasted --yes, "guaranteed," when asked a second time in the same interview -- a recession by Q1, indicating that it had "already started" back in September. They utterly skewered any of their clients with big bucks on the line, as well as the more casual public observers, who may have leaped hysterically on board to follow them. In fact, their call was a lot worse than Meredith Whitney's recent folly because the markets have climbed far higher than Meredith caused munis to decline, albeit briefly, and the economy is further strengthening, as we speak.

     

    Apparently, there's no humility in sight, nor any profits for their adherent.
    15 Mar 2012, 04:29 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13372) | Send Message
     
    ECRI is flat wrong right now. That is just the facts. Their call is over 6 months stale with no recession and a mildly improving US. Maybe they are looking at China.

     

    Commodities will run up next and inflation. Then if the Fed eventually reacts by 2013 we could get a slowdown. But knowing the Fed they might respond by 2014 when we get real inflation or we are poised for a real business cycle downturn. The business cycle has been frozen by government intervention so I can't blame ERCI. The US is no longer acting like a capitalist economy. More like a managed economy where recoveries are slowed down and come just in time for the next big downturn. I give it a year or two, then get out as soon as you see the fall. It may be worse than 2008.
    15 Mar 2012, 04:18 PM Reply Like
  • williamwilliam
    , contributor
    Comments (681) | Send Message
     
    followers of the "Kondratieff waves" may agree with you on 'worse than 2008" because they expect a worsening economy until end of 2013, with 2014 being the true start of a sustained upturn.
    15 Mar 2012, 04:26 PM Reply Like
  • ming2198
    , contributor
    Comments (8) | Send Message
     
    dollar goes lower, crude goes higher before it crashes at least, but when dollar goes higher, crude stays flat or continue higher, then ben will say "shiiiiiiiiiiiiiiiiiit, it's not working this time". Ben is in the corner, maybe he should have a chat with iranian. Anyways, stock market doesn't track economy, it only tracks margin, margin, and margin, economy can stay flat, as long as company are increasing margin by better productivity even with flat demand, margin expands. But now, margin is at risk, in my view, it's topped, demand side will cut by gas and food price, productivity is probably at top speed, hiring is inevitable, these two factors will reverse the situation in last 3 years, margin is now heading south, so goes the share price, very simple. Guess what, we still have shit load of house to sell, student loan is about to explode, europe has all kinds of election risk, china may tip into more communism because asian and western have different personality, import driven economy will never work in china, chinese has learned from thousands years of history to lay low and save, live within means, chinese plainly doesn't care much about lavish life style, they are happy with what they have, at least for most of them, so I don't see how this whole market can continue higher. All tech companies are media driven, no one really makes things to advance humanity, the mobile revolution is really just making computing more portable and more "fashion", but does it make really make us better? so crash crash and burn, here goes the 2012 doom rap
    15 Mar 2012, 06:50 PM Reply Like
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