ECRI CEO Achuthan Says All Indications Point to 'Recession'

Economic Cycle Research Institute (ECRI) CEO Lakshman Achuthan appeared on CNBC Friday morning with some comments on the outlook for the global economy into 2012. He was bearish into 2011, calling for a recession, and despite averting that disaster he remains convicted there is still plenty of downside left.

The following are some highlights from a 10-minute interview with CNBC:

• Last September, Achuthan said he was expecting a recession and pointed toward the middle of 2012 for the implications to start being felt.
  
  
• CNBC cited lots of positive economic data -- unemployment numbers and stocks -- for continued growth, and asked why Achuthan sees a recession. He replied GDP growth peaked in the middle of 2010, fell through the second quarter of 2011, and has been largely flat since.
  
  
• Other keys taken into consideration include income growth and sales growth rates echoing the same pattern. Further, industrial growth is currently at a 22-month low.
  
  
• All of the above factors blend together into ECRI's coincident index, currently at a 21-month low.
  
  
• The coincident index hasn't seen a drop like that in the last 50 years, with recession generally following thereafter.
  
  
• Leading indicators like the stock market allude to what happened in 2007 ahead of the 2008 recession and financial mess. Stock markets peaked before getting crushed the following year.
  
  
• ECRI's public reading index has been creeping higher since December, to which Achuthan attributed to the printing of money by the Fed.
  
  
• Not only is the Fed printing money, but most other global banks -- particularly in Europe -- are doing the same, something that has not happened before.
  
  
• Recessions aren't usually realized to the public until about six months after one begins, which means the next one should hit just about election time.

Video below:

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