Quote: Originally Posted by ToningtonA new recession seems inevitable
The US is not on the brink of a recession. The last quarters have seen growth in gdp, in manufacturing, and in employment.
By Chris Isidore@CNNMoney
February 24, 2012: 4:44 PM ET (Just last Friday)
NEW YORK (CNNMoney) -- While most economists have stopped worrying that the U.S. will fall into a double-dip recession, one influential economist maintains his position that the nation won't be able to avoid a new downturn.
Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, said on Friday that his research firm is sticking with the forecast it made in September: A new recession is inevitable (external - login to view)
, despite improvement in high-profile economic indicators, such as job creation and unemployment, and a stock market rally.
ECRI is one of the more widely respected firms on economic recessions, as it has never been wrong when forecasting that a recession would start, or failed to predict a recession well before it was widely accepted.
Achuthan predicts the recession will happen even without a new shock to the economy, such as a spike in oil and gas prices (external - login to view)
or a Greek sovereign debt default (external - login to view)
sparking a financial meltdown (external - login to view)
. If those things occur, he says they will simply make an inevitable recession more painful.
In fact, Achuthan said data gathered since his September forecast only confirms his view that economic growth has slowed to such a degree that a downturn is now unavoidable, likely by late summer.
"Now that we have several months of definitive hard data, this is not a forecast," he said, pointing to key measures that don't receive as much attention from the public or many economists.
Specifically, he identifies annual growth in industrial production, real personal income and spending, as well as the year-over-year change in gross domestic product, a broad measure of the nation's economic activity. That GDP reading has been stuck between 1.5% and 1.6% growth for the last three quarters, far less encouraging that the rising quarterly GDP, which is more widely reported.
"Basically, growth has flatlined," he said.
Some might think that a new downturn would be a so-called double-dip recession, in that it comes before the economy has fully recovered from the jobs lost during the Great Recession. But Achuthan said if the economy falls into recession at this point, it would be a new recession, not a double dip, given the time that has passed since the formal end of the recession in 2009 and the economic growth since then.