Tuesday, September 23, 2014

ECRI recession call: unhappy three year anniverary

 - by New Deal democrat

(yeah, I know)

It has now been a full three years since ECRI announced that the US was "slipping into recession" "now" and in fact "it might have [already] started."  The full catalogue of ECRI's pronouncements can be found in my post one year ago on the two year anniversary of their epic faceplant.

Still, the quantitative and sequential long leading/short leading/coincident/lagging indicator approach they inherited from their founder, Prof. Geoffrey Moore is one of obvious merit. In 2011, they made the human error of reading the temporary air-pocket caused by the debt ceiling debacle as something more lasting.

Last year I made a plea that they consider a "recession 2.0" watch. That watch would be premised on the idea that, even if their existing call is wrong, the new data when it occurs will justify a recession call totally independnent of their pre-existing 2011 recession call. 

This is the approach ECRI seems to have adopted, no longer focusing on attempting to justify their 2011 call, but simply looking forward from the data now.  I approve.