U.S. Economy Tipping into Recession


Early last week, Economic Cycle Research Institute (ECRI) notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.

Just WHY is this important news?

Well, primarily, they haven’t been wrong.

as The Economist has noted, we’ve correctly called three recessions without any false alarms in-between. In contrast, most of those who’ve accurately predicted a recession or two have also been guilty of crying wolf – in 2010, 2005, 2003, 1998, 1995, or 1987.

Secondly, ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, the Weekly Leading Index, and other shorter-leading indexes. The U.S. Long Leading Index, which was the first to turn down, before the Arab Spring and Japanese earthquake.

What is very troubling is that the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”

November 6, 2012, is such a long time to come.

It’s important to understand that recession doesn’t mean “a bad economy”. We’ve had that for years now. The term ‘recession’ means an economy that keeps worsening. The academic reason given for the end of the ‘last’ recession’ was due to the economy not contracting anymore but seemingly treading water.

But because there is a new recession the economy is locked into a vicious cycle. This means that the jobless rate, already at 9+%, will go much higher…and the (annual) federal budget deficit, already above a trillion dollars, will soar.

Remember what Betty Davis’ character Margo Channing in “All About Eve” said:

“Fasten your seatbelts—it’s gonna be a bumpy night!”

Let us all pray that there will be a new morning in America on November 7, 2012.

About these ads

One Response

  1. No President has been re-elected if the unemployment rate is above
    7.4%.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

%d bloggers like this: