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Lakshman Achuthan
Lakshman Achuthan

‘Leading authority’ on business cycles gets recession call wrong Add to ...

The folks at Economic Cycle Research Institute, which bills itself as “the world’s leading authority on business cycles,” should be getting pretty worried by now.

ECRI and its outspoken founder, Lakshman Achuthan, made a call back in Sept. 2011 claiming the U.S. was then on the cusp of a recession and a downturn was imminent. Well, it’s 15 months later and the forecast U.S. recession has yet to materialize. As recently as late November, Mr. Achuthan was back at it on Bloomberg TV, reiterating his negative view.

Mr. Achuthan made his recession prediction based on proprietary leading indicators of economic activity that he doesn’t share with the media. But ECRI does make public, every Friday morning, a weekly index of leading economic indicators and right now it doesn’t look good for the firm, which prides itself as “the world’s leading authority on business cycles.”

The latest result: the index is up sharply and looking to break out strongly to new highs from over the past year.

Mr. Achuthan may yet be right, in the way that a broken clock is correct two times a day, but with his firm’s own leading indicator pointing hard to the upside, time may be running out.

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