Saturday, September 02, 2006

ECRI: Premature to call a recession.

The Economic Cycle Research Institute, or ECRI, was one of the first outfits to identify the economic trouble brewing after the Internet bubble. They look at a variety of economic data, some of which is explained in the Bloomberg video below. Right now their indicators have broadly softened, but are not at a level suggesting a recession. [...yet. But we can keep an eye out and try to spot which way things are tilting.]

New York Times: A Forecast for a Fork in the Road.


At the Economic Cycle Research Institute, the forecasters have noticed that the last six months bear a striking resemblance to two different kinds of periods: the run-up to a gentle slowdown, like those of the mid-1980’s and mid-90’s, and the run-up to recession. In both situations, consumer expectations fall while interest rates and inventories rise, which has already begun to happen. But the two paths — slowdown and recession — historically diverge sometime after the six-month mark. Starting Friday, with the August employment report, we will begin to get a sense of which road we’re going to take.

Globe & Mail: Housing Reports a Bad Omen?


In a further sign of trouble, an index that foreshadows turning points in the U.S. economy suggests things will get worse before they get better. The Economic Cycle Research Institute's weekly leading index annualized growth rate fell to a 179-week low yesterday, its worst level in more than three years.

"The growth rate has been falling steadily since January," said Anirvan Banerji, director of research at the independent forecasting group, based in New York. "That suggests that as far as the eye can see, the U.S. economy will keep slowing, at least through early 2007."

Mr. Banerji said it is too early to tell if the index is pointing to an actual recession, but would not rule out that possibility. "We are certainly not seeing any indication of a revival in economic growth."

Bloomberg: Achuthan of Economic Cycle Calls Recession Fears `Premature'.