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Achuthan: The US Will Be in Recession by the End of Next Month

Lakshman Achuthan is sticking to his call that the US will enter recession in the second half of 2012. He spoke to CNBC’s Squawk Box crew about it this morning. Take a look.

Note: Achuthan is right about the NBER’s definition of recession. It is not back to back quarters of a negative change in GDP.

A recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak. During a recession, a significant decline in economic activity spreads across the economy and can last from a few months to more than a year. Similarly, during an expansion, economic activity rises substantially, spreads across the economy, and usually lasts for several years.

[...]

The Committee does not have a fixed definition of economic activity. It examines and compares the behavior of various measures of broad activity: real GDP measured on the product and income sides, economy-wide employment, and real income. The Committee also may consider indicators that do not cover the entire economy, such as real sales and the Federal Reserve’s index of industrial production (IP). The Committee’s use of these indicators in conjunction with the broad measures recognizes the issue of double-counting of sectors included in both those indicators and the broad measures. Still, a well-defined peak or trough in real sales or IP might help to determine the overall peak or trough dates, particularly if the economy-wide indicators are in conflict or do not have well-defined peaks or troughs.

Also note that the last recession in the US ended 3 years earlier in June 2009.

This post originally appeared at Credit Writedowns and is posted with permission.

7 Responses to “Achuthan: The US Will Be in Recession by the End of Next Month”

Paul JohnsonMay 9th, 2012 at 11:56 am

And will Ackuthan resign his position if he is proven to be wrong by subsequent events? Ha, ha, ha!

HamiltonFanMay 10th, 2012 at 12:24 pm

NBER's definition of a recession is woefully inadequate. A recession should be defined as "a period of at least one month in which the unemployment rate exceeds five percent".

By that definition, we have been in a recession for the entirety of the Obama presidency.

RandhirMay 10th, 2012 at 2:16 pm

simply put a recession starts when overall productivity falls below overall expenses in a continuous cycle

GuestMay 12th, 2012 at 6:21 pm

This video is a perfect example of WHY we are sure to have more and more recessions. The capacity to listen carefully, to examine one's definitions and premises, to reason cogently, and so forth, have been overridden by screaming. Keep in mind as well that those who scream the loudest are more and more often the ones who are paid the best. Welcome to permanent infantilism. It's going to take more than a recession to change this pattern.

BJ LaddMay 14th, 2012 at 7:20 pm

Your response is another example of narrow minded Republican stupidity…………..when are
you going to get off your self righteous high horse and use some common sense when trying to discuss an issue !!!!!!!!!!

HamiltonFanMay 15th, 2012 at 7:22 am

BJ, you've assumed that I am a Republican. I am not. NBER claims we have not been in a recession since 2009. That is ridiculous. Paul Krugman states we have been in a depression for the past five years. His diagnosis is far closer to accurate than that of NBER. When NBER says we are not in a recession, policymakers become complacent and do not take action to stimulate the economy. Therefore, the standards for an economy to be declared "in recession" must be lowered.

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