Feb 242012

In an interview with CNBC, ECRI Chief Laxman Achutan again predicted recession in the first half of 2012. Main points he made were:

  • Mostly the financial markets are responding to Fed juicing.
  • Admits the jobs picture has done a bit better, but jobs will get bad again, as the consumer flags.
  • Always predicted the recession would come in the first half of 2012, so he still has time.
  • The “full array” of leading indicators is not negating his recession forecast.
  • GDP, industrial production, sales growth, etc… they’re all getting worse.

Source: Business Insider

Our take: ECRI has a great track record at prediction recessions. Anything they say regarding the topic must be considered seriously, even if markets are very bullish at the moment and nobody seems worried about a new recession. However, we think that if the economy starts seeing signs of slowdown, Fed will respond with a full blown QE3, and that will push out recession at least until late 2012 or 2013.