Lakshman and I have been friends for over a decade. We met after I wrote about how impressive their US Future Inflation Gauge (US FIG) was as a leading indicator for the direction of the Fed Funds rate changes.
Summary of the key points:
- We are in an economic recovery now but with the economy flying at a lower altitude where the ups and downs will be more noticeable thus
- We should expect more frequent recessions.
- The economy was smoother in the past that was wrongly attributed to "just in time manufacturing," better policy makers like the Fed and better models.
- Policy driven by models actually makes things worse since they use lagging indicators.
- ECRI's leading indicators can only look ahead 2 to 4 quarters.
- Central banks use old models that "don't work in the real world" and create bigger boom-bust cycles
- Chance of inflation being above what the Fed is targeting is "pretty good" because we have a recovery now and they are strapping a rocket onto the back of the economy and they are stepping on the gas.
- Look to take more risk now because we should boom before the next bust.
- Don't give up if you are looking for a job as it will get better first.
- "Get it while it is good" and reassess risk in the summer.
- Watch the Future Inflation Gauge (US FIG) to get a handle on inflation. (I cover this in both my newsletters.)
- Lakshman says the FIG is going up since before QE2 was announced so he thinks the Fed is behind the curve.
- Protect yourself and "Get while the getting is good"
==> 0328/8: ECRI Calls it "A Recession of Choice"
==> 5/31/08: Brinker's Cassandra Bashing
Below are some of ECRI's recent predictions that I posted as articles to help ECRI document their great success.
|Click to View full size Bob Brinker Buy Levels|
- Nov 30, 2010 "ECRI Calls for Revival of US Economic Growth"
- Oct 28, 2010 "The much-feared double-dip recession is not going to happen"
- Oct. 28, 2010 ECRI Warns of High Inflation Nightmare From QE2
- Sept. 24, 2010 ECRI - Premature to Predict New Recession
- July 01, 2010 ECRI Weekly Leading Indicators Widely Misunderstood
- Dec. 04, 2009: ECRI Warns of Lasting High Unemployment Despite Economic Recovery
- July 31, 2009: ECRI Predicts End of Home Price Downturn
- July 21, 2009: ECRI Predicts The End of the Recession is Imminent
- April 3, 2009: ECRI Says US Business Cycle Recovery Ahead
- March 28, 2008: ECRI Calls it "A Recession of Choice"
Beating the Business Cycle
By Lakshman Achuthan and Anirvan Banerji