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February 25, 2012

Economic Cycle Research Institute forecasts a US recession in 2012

CNN Money - Lakshman Achuthan, co-founder of the Economic Cycle Research Institute, said on Friday that his research firm is sticking with the forecast it made in September: A new recession is inevitable, despite improvement in high-profile economic indicators, such as job creation and unemployment, and a stock market rally.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index edged down to 123.5 in the week ended Feb 10 from an upwardly revised 123.6 the previous week. That was originally reported as 123.3.

ECRI's Lakshman Achuthan joined Bloomberg Surveillance to point out that U.S. economic growth has actually slowed in recent months, contrary to the consensus view.

He identifies annual growth in industrial production, real personal income and spending, as well as the year-over-year change in gross domestic product, a broad measure of the nation's economic activity. That GDP reading has been stuck between 1.5% and 1.6% growth for the last three quarters, far less encouraging that the rising quarterly GDP, which is more widely reported.

"Basically, growth has flatlined," he said.

Some might think that a new downturn would be a so-called double-dip recession, in that it comes before the economy has fully recovered from the jobs lost during the Great Recession. But Achuthan said if the economy falls into recession at this point, it would be a new recession, not a double dip, given the time that has passed since the formal end of the recession in 2009 and the economic growth since then.





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