He held off for a while in hopes that maybe Washington could come through with enough monetary and fiscal stimulus to stave it off, but now Mr. Business Cycle himself is saying it: We’re in a recession. From CNNMoney:
Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, said the economy has now fallen into what he calls “a recession of choice.”
He argues that the economic stimulus package passed by Congress this year is too late to help many consumers and businesses and that the Federal Reserve was too timid when it started trimming interest rates last fall.
… He said low business inventories at the end of last year gave policymakers a chance to avoid the recession, because any spur to spending by businesses or consumers would have resulted in a quick pick-up in production.
“There was an opportunity that was wasted by policymakers because they didn’t understand those dynamics,” he said. “That is one aspect of how the policymakers have goofed and why this recession is a choice, not something that happened by bad luck and chance.”
He added that the more decisive action taken so far this year by Congress and the Fed has come too late to stop the economy from falling into recession.
Achuthan is a protege of economic-statistics-pioneer Geoffrey H. Moore, who used to more or less decide on his own whether the nation was in recession or not. He’s got a very good record on recession calls, so I think this one’s now about as close to official as it’s going to get before the NBER’s Business Cycle Dating Committee finally gets together for a meeting.
My one thought regarding his comments is that maybe preventing recession shouldn’t always be the absolute No. 1 priority of monetary and fiscal policymakers. I may reconsider that, though, when I get laid off six months from now.