ECRI: “We Do Believe we are in Recession”

The ECRI is sticking to their recession call.  The research firm with an excellent track record of forecasting recessions says the recent data does not mean the recession isn’t here.  In an article on their website this morning and an interview with Bloomberg, the firm says the recession is here and most won’t know it until well afterwards:

“It has been almost a year since we predicted a recession. Back in December, we went on to specify the time frame for it to begin: if not by the first quarter of the year, then by mid-2012. But we also said at the time that the recession would not be evident before the end of the year. In other words, nine months ago we knew that, sitting here today, most people probably would not realize that we are in recession – and we do believe we are in recession.

Think back to four years ago in 2008, a couple of days before the Lehman failure. Looking at the data in hand, you would see GDP growth at about 1% in Q1 and 3% in Q2. More specifically, Q2 GDP growth had just been revised up on August 28 from 1.9% to 3.3%, sparking a 212-point Dow rally that day.

In an interview featured in a recent issue of Bloomberg Businessweek Chairman Greenspan was asked whether anything during the financial crisis had changed his worldview the way Ayn Rand had decades ago. He said, “Yes, of course,” recalling the day before the Lehman collapse when he had said that recession was probably coming – not that it was already nine months old. At the time, he was far from alone in his view. When asked if that mistake had been humbling, he replied, “Indeed.””

You can see the Bloomberg interview here: