Lakshman Achuthan of the ECRI has been fairly mum on the prospects of a new recession (for those who aren’t aware of Achuthan and the ECRI’s impressive recession calls in recent years please see here). Earlier this year he said the economy was slowing and that the slow-down would be protracted and persistent. That was clearly right. But now the tone of his rhetoric is changing. While the market focuses only on Greece, domestic affairs appear to be deteriorating. And Achuthan now sees the odds of a new recession as “quite high”. Below are some quotes from a recent NPR interview:
“The risk of a new recession is quite high,” he says.
“we are skating on very thin ice.”
“That is a depression for that cohort […] And it poses massive problems for policy makers because a new recession automatically increases all of these expenditures out of the public sector while at the same time dramatically decreasing all of their revenue. So there’s even less ability to help the people who are hurting the most.”
“This is very different than the early 1980s, he says. “What we’re living through and dealing with now has been building for decades. If you look at the data, you see that the pace of expansion has been stair-stepping down ever since the 1970s, on all counts — on production, how much can we produce, how many jobs can we create, how much money do we make how much do we sell? These are all trending down.”
“The best news I can give you is that cycles do turn, but there is going to be a lot of pain in between,”
See the full piece at NPR.