Courtesy of Mish.
After insisting for over a year that the US was on verge of recession if not in one (I made the same mistake), The ECRI now maintains Recoveries Remain Resilient.
Growing ranks of the great and the good are worried that the global economy, like Humpty Dumpty, will have a great fall, never to be put together again. We understand their apprehension, given our concern since the summer of 2008 about collapsing trend growth.
[Mish comment: what about the ECRI recession call made in September 2011?]
But in terms of our current assessment of global recession risk, we aren’t ready to join in. This is because the major developed economies aren’t yet in windows of vulnerability that our leading indexes are designed to detect.
Right now, no matter what the source of the potential shock – Greece, China or the Fed – the major developed economies are unlikely to be tipped into recession. No doubt this will change in time, and the U.S., in particular, bears close watching. But it’s too soon to fret about recession just yet.
False Alarm
I was wondering if the ECRI ever admitted their mistake. I found it, on May 11, 2015, quite a few years late.
Doug Short on Advisor perspective writes ACHUTHAN: The US recession I’ve been warning about for years was actually a ‘false alarm’
The ECRI finally admits to a bad recession call in September 2011, referring to it as a “false alarm”. They describe the situation as “Greater Moderation”, where the 2012-2013 downturn was the worst “non-recession” in 50 years and is unlikely to be repeated.
History of ECRI’s 2011 Recession Call
ECRI’s weekly leading index has become a major focus and source of controversy ever since September 30, 2011, when ECRI publicly announced that the U.S. is tipping into a recession, a call the Institute had announced to its private clients on September 21st.
Chronology of ECRI’s Recession Call
- September 30, 2011 : Recession Is “Inescapable”
- February 24, 2012 : GDP Data Signals U.S. Recession
- May 9, 2012 : Renewed U.S. Recession Call
- July 10, 2012 : “We’re in Recession Already”
- September 13, 2012 : “U.S. Economy Is in a Recession”
Tipping Into Recession…
