Owen B

Perhaps There Are Unseen Green Shoots

Found a list of quotes from their calls vs. forecasts of others (consensus?) through 2007 on their site:

www.businesscycle.com/.../


On Jul 20 10:34 AM TeresaE wrote:

> So, what were they forecasting in '05, '06, '07 and '08 right up
> to September?
>
> Don't remember reading much (anything) about the upcoming problems,
> yet here we are.
>
> I could be wrong, and if I am, please point me to their forecasts
> from those years so I can see for myself.

Perhaps There Are Unseen Green Shoots

I've followed ECRI ever since The Economist magazine highlighted their performance in calling the 2001 recession when most others missed it completely. Below are two recent comments from Lakshman in a discussion thread on the bigpicture blog that relate in part to the issue of "if we were in a 1929-33 type downturn how would ECRI indexes fair?"

# lakshman Says:
July 17th, 2009 at 6:31 pm

mark Says:
July 17th, 2009 at 8:53 am
Just another recession? Same as it ever was? Maybe.
Let’s assume for the moment that ECRI is right. (And by the way, only an economist could call 1929 - 1933 a “recession”.) In any case, what we want to know, what we need to know, is what does that mean for stock prices? The last recession ended in 4Q ‘01 but stock prices didn’t bottom for another year.
So what say you Lakshman?

Hi Mark,

Thanks for your question about the U.S. Long Leading Index (USLLI) after the last recovery began.

After correctly navigating the 2001 recession in real-time, USLLI growth peaked in January of 2002 and did not bottom again until March of 2003.

By the way, I’m not an economist (and ECRI doesn’t use econometric models for forecasting the cycle) but I do know something about business cycles. Every depression consists of one or more very deep recessions. You can see for yourself on the NBER website here: www.nber.org/cycles/

Kind regards,
Lakshman

# lakshman Says:
July 17th, 2009 at 6:42 pm

David Merkel Says:
July 17th, 2009 at 12:52 pm
Lakshman, I give ECRI the benefit of the doubt regarding this because of your great track record. What would help me (and possibly many others) would be if you would point out what components of your underlying indexes are showing strength at present.

Hi David,

I appreciate your question, but the components of our indexes are proprietary. Nevertheless, the key reason our leading indexes work is not because of some special component(s) that we have, but rather because of what they illustrate when the three P’s are observed.

In this case we’re seeing a pronounced, persistent and, perhaps to your point, a quite pervasive rise in the number of components contributing to the rise. For example, in the Long Leading Index it’s not just easy money that is driving it up, and in the shorter leading indexes it’s not simply the stock market, or ISM (which in fact isn’t included).

I hope this helps to address some of your concerns.

Kind regards,
Lakshman