Lakshman Achuthan of the ECRI joined CNBC this morning to discuss his outlook for the economy. He says nothing that has occurred in the last few months has changed his outlook. The conversation got a little testy as the hosts implied that Mr. Achuthan’s call had already been wrong because the data was improving since his last CNBC appearance and GDP figures had come in fairly healthy. Achuthan wasn’t having it. He says his leading indicators still point to a decline in growth while the market is focusing largely on coincident and lagging indicators.
Personally, I think the balance sheet recession has thrown a lot of people for a loop and the debate over recession and double dip is missing the entire point. The economy never really recovered from the debt collapse. All that occurred was a massive government stimulus program during a period of de-leveraging. Currently, the deficit is set to remain at $1.3T in 2012. If we get a decline in growth in 2012 I am willing to bet that it will be mild at best. Unfortunately, the upside is also capped in the low single digits due to the continued weakness in the consumer sector. So, muddle through during a balance sheet recession is the outlook in my opinion. Getting lost in the double dip debate loses focus on the macro drivers at work here.
The full interview is attached:
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.