ECRI Says Recession Is Still Coming - Evidence Is In Coincident Data

Feb. 26, 2012 2:19 AM ETDIA, SPY, QQQ48 Comments
Steven Hansen profile picture
Steven Hansen

On Friday on CNBC, ECRI renewed their recession call - now saying a recession should hit by mid-year 2012. Supporting evidence for this call was based on coincident data's growth rate-of-change was falling to historical recession levels.

There is no current data in my world that is suggesting a USA recession. Econintersect focuses on elements of economic releases (and not the headlines) which historically have led economic cycles. Econintersect always provides analysis of growth rate-of-change.

And for the most part, these economic elements are suggesting the economy is improving - but also are indicating the growth rate-of-change is degrading or flat. But in all cases to date, the overall year-over-year growth remains above levels which would indicate an upcoming recession.

Most readers focus on the headlines of economic releases - jobs up, jobs down, industrial production up, industrial production down, trade up, trade down. Pundits grab these headlines and spout, then the markets react. Many of these pundits and most readers cannot assign a relative importance to individual headlines anyway.

Worse, headlines are usually a month old (or further back) views of the economic segment - and, even more concerning, the headlines will be quietly revised in the coming months. The headlines are almost always dead wrong at economic turning points.

This past week the January 2012 existing home sales data from the National Association of Realtors (NAR) made major downward revisions to their December 2011 data. And the January 2012 new home sales data from US Census made significant upward revision to the December 2011 data. This negated all analysis by any punter discussing December 2011 existing or new home sales.

This simply shows that one should be skeptical of most data when first issued as it is based on extrapolations, surveys and often incomplete information. It is better to look

This article was written by

Steven Hansen profile picture
Steven Hansen (A.K.A "The Hand") was born, raised and educated in California. Steven worked for 25 years for a major international engineering and construction corporation. He has lived outside of the USA almost continuously since 1978. Steven retired in 1995 to sail the world. He is still sailing today and is currently located in Malaysia. On the financial side, Steven is a pragmatist. His motto is to "go with the flow" and believes that the only correct investing method is one which makes you money both short and long term. He does not fall in love with philosophies – only results. He has invested well enough to retire at 45 and stay retired.

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