Avoiding Recession at All Costs

Published on
June 15th, 2017
44 minutes

Avoiding Recession at All Costs

The Interview ·
Featuring Lakshman Achuthan

Published on: June 15th, 2017 • Duration: 44 minutes

Lakshman Achuthan, co founder of the Economic Cycle Research Institute, takes us inside the business cycle to examine the impact of waves of QE and where we stand in terms of identifying the timing of the next recession. With an outstanding track record of forecasting cyclical inflexions, Lakshman isolates the signals that will lead to the next turning point. Filmed on May 22, 2017, in Orlando.


  • JD
    Jonathan D.
    9 September 2017 @ 15:26
    The shock was how Grant received trhe message there is no recession for the next several months :)
  • DS
    David S.
    16 June 2017 @ 07:22
    Constantly blaming the Fed is getting really old. Wall Street tied one hand behind their backs with mortgage derivatives that were all going bankrupt and a purposely dysfunctional Congress tied the other hand behind their back. Their mandate is inflation and unemployment. What would you expect them to do. DLS
    • DS
      David S.
      21 June 2017 @ 21:06
      I ask the question again ...What would you expect them to do? At least six people have alternative ideas that I would like to see. DLS
  • DS
    David S.
    16 June 2017 @ 07:55
    No one knows what is going to happen! There is no longer a long-term normal. The manufacturing business cycle is marginalized as a smaller and smaller part of future economies. History is no longer the future. Figure out the new, or stay on the side lines. How could you predict the future at the start of the industrial revolution? Be careful and keep a lot of powder dry. I am 50% in cash and wonder if it is enough? DLS
    • AL
      Alex L.
      18 June 2017 @ 21:12
      I agree that there is some pretty revolutionary stuff going on in technology, but to claim that that means that business cycles will no longer exist seems like a bit of a stretch. The period / frequency of them might change, but even with new technology, humans are cyclical creatures. You'll note that Lakshman mentioned that there were cycles going way back into the past before the Great Depression, despite all the advancements that have occurred since then. Now, if AI takes over all of the manufacturing and economical processes, maybe it will stop being cyclical. Unless they are programmed to inherit their human creators' cyclical tendencies...
    • DS
      David S.
      21 June 2017 @ 21:03
      I agree with your comment. I overstated my case, but the speed of disruption like the proposed purchase of Whole Foods by Amazon effects immediate stock and operational changes for everyone in the sector. There is a new paradigm that says a company does not need to make profits. It just needs exponential revenue growth. All too confusing for a 70+. Thanks again for your comment. DLS
  • EL
    Elizabeth L.
    15 June 2017 @ 12:56
    Yes, Grant, that was fascinating. Quite timely given there is a lot of speculation currently about where we are in the business cycle. This is a most helpful discussion. Thank you.
    • WE
      William E.
      21 June 2017 @ 18:01
      How can "anyone" give a thumbs down to such an innocuous comment???
  • LJ
    Lucille J.
    15 June 2017 @ 21:36
    If everything is in an upswing -Why did Trump win the election .
    • MS
      Matt S.
      18 June 2017 @ 17:27
      Russian hacking of course! :P
    • WE
      William E.
      21 June 2017 @ 17:47
      I gave you a thumb's up with the assumption you were being facetious.
  • SL
    Steven L.
    16 June 2017 @ 01:57
    It's been WAY too long since we've heard from Mr. Achuthan. I definitely replay his interviews. I'm retired and can't afford a subscription to ECRI but I sure recognize the value of the ECRI information. I wish they had a subscription option for us USA folks, that aren't investment professionals, who are interested in the USA forward indicators. Until then, I'll keep using my forked stick to figure out recession probabilities.
    • WE
      William E.
      21 June 2017 @ 17:43
      Well said Steven... however to my ears it sounds like when you step to the plate you meet the ball squarely and drive it into the outfield. Good luck!
  • ca
    cyavash a.
    20 June 2017 @ 02:09
    I enjoyed this interview because I didn't feel like I was being sold something, the guest was really knowledgeable and well spoken, and I was able to glean some specifics for follow up research. Thank you.
  • VS
    Victor S. | Contributor
    19 June 2017 @ 16:01
    Since 1981 recoveries ,due to the Fed Greenspan standard, have gone way longer than normal -1854 to 2009 was 38.7 months ...1981 to date 103 months and this one so far is 97 months.... in other words these predictions of a recession coming later are not very special since 2007 the policy is to keep the game going at all costs? If you can call the top within a month that would be worth while call?
  • MS
    Matt S.
    18 June 2017 @ 17:35
    A good interview - as others have said, some superimposed charts would have been nice. And if the PMI is not a leading indicator to him... then what is?! As someone said here (or maybe it was Raoul on AIF) America really only has cars, weapons and aeroplanes left of its manufacturing - but I hear that Boeing is shipping off its tech to China soon, so within a few years China will be building planes to compete with Boeing and Airbus's dominance. I can tell you right now - I will never fly a Chinese made airliner!
  • RZ
    RICK Z.
    18 June 2017 @ 17:13
    I thought the comments as to," it's going to get a little bit complicated" was humorous – Grant should've reminded him he wasn't on CNBC ! LOL
  • JW
    James W.
    18 June 2017 @ 04:11
    This went nowhere. Whatever of value Lakshman may have to convey, we got nothing of it until the last 5 minutes, which had some very broad generalizations devoid of supporting data.
  • DW
    Devin W.
    17 June 2017 @ 15:55
    Glad I'm viewing this and I'm not an economist. This is where the REAL is!
  • SB
    Stewart B.
    16 June 2017 @ 21:20
    Great stuff. And different content to most of the other speakers. I found the call of no recession for 2017 and an industrial slowdown plausible and balanced. Grant's questions are great as always. Only part I wasn't convinced on was Australia's continued growth being the outcome of RBA policy. Australia has relatively favorable demographics, and IMHO a good part of it's growth has been driven by growing it's (gross) private and public debt strongly over the past 25 years (from a relatively low initial starting point). Thumbs up! I'd love to see Lakshman back again!
  • VK
    Vladimir K.
    15 June 2017 @ 23:53
    Fantastic interview. As an economist myself, it was a pleasure to listen. Decided to build the similar model to monitor current economic conditions. Surprised he didn't talk critically about the structural changes affecting the accuracy of unemployment and inflation measurements.
  • LA
    Linda A.
    15 June 2017 @ 14:28
    I am not an economist but I find it hard to believe that monetary policy failed to disrupt the business cycle. Didn't it prolong the business cycle by propping up banks? If qe increased liquidity won't qe tighten liquidity thus choking off companies' borrowing? We are witnessing a commercial real estate collapse only to worsen and companies having to pay back all this corp debt for stock buy backs & reckless m&a? Shadow stats show real unemployment @ 23%. What am I missing?
    • RM
      Robert M.
      15 June 2017 @ 21:30
      Give him some credit for misunderstandings that are easy in broad ranging interviews. I googled his articles with "ecri cause of 2012 recovery in cycle" and found that he does actually give MP a place as a secondary factor. https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-achuthan-2012-us-recession-call-redux
    • VK
      Vladimir K.
      15 June 2017 @ 23:39
      CB didn't disrupt the business cycle, they just decreased its volatility with monetary policy. But when you suppress volatility too much, it will go wild. It's just postponing the inevitable.
  • DP
    David P.
    15 June 2017 @ 22:07
    Great interview, but I am wondering if he gave (off camera) any indication of what part of industry is slowing the most? Is it oil, or is it Chinese manufacturing, or something else?
  • GT
    Graham T.
    15 June 2017 @ 15:31
    Where are the charts? Where is the visual data to prove the point? I have no problem with his work and am sure he is correct on his point about "HARD V SOFT DATA", but even a cursory glance at the yield curve suggests there is a problem out there. What about the 52w ROC of orders or credit growth or even the 532w ROC of the coincident indicators. Investors are looking at the first , if not the second derivative at the very least. IF this turns out like 1987, God forbid, there will be very little time to time lagging indicators like Economic ones. Just playing Devils Advocate and trying to think about what the commentary means. Don't shoot the messenger.
    • LJ
      Lucille J.
      15 June 2017 @ 21:30
      Well said
  • AM
    Alonso M.
    15 June 2017 @ 18:28
  • IV
    Ian V.
    15 June 2017 @ 16:57
    Great interview, Grant. Thank you! Very hard to still believe in business cycles these days. I suppose the key is as he said, in the 21st century they are different.
  • ag
    anthony g.
    15 June 2017 @ 16:43
    good one - hopefully have him again in early 2018 ?
  • AB
    Arijit B.
    15 June 2017 @ 16:21
    For those interested, it's worthwhile checking out the various ECRI composite indexes on Achutan's website https://www.businesscycle.com/ I found it more useful than the book he co-authored with Anirvan Banerji "Beating the Business Cycle" published in 2004.
  • JL
    Jacob L.
    15 June 2017 @ 15:03
    Just want to give a thumbs up to the short intros in the beginning and summary at the end that Grant has started doing. Works really well, thanks!
  • HJ
    Harry J.
    15 June 2017 @ 14:44
    Great job Grant
  • KA
    Kelly A.
    15 June 2017 @ 14:36
    I followed this guy for years. His theories make sense at least on the surface, BUT he also missed some BIG influences on the market. For example, he missed the call [many times] on the bull run that was starting in 2010-11, for example, and was almost a perma bear for a long time. Great to see him on RV for his points of view --just as with other guests. And as with other guests: they provoke our thoughts, but don't follow blindly.
  • DB
    Darko B.
    15 June 2017 @ 11:28
    I'm Australian and I suspect our luck may run out soon. We have built and are building too many apartments in the eastern cities, our property is some of the most expensive in the world, Sydney is the second most un-affordable market behind Hong Kong and we have a household debt to GDP ratio of 125%, making it the second highest on earth. I'm hoping commodities pulls us through otherwise it could get ugly.
    • KV
      Koen V.
      15 June 2017 @ 13:48
      If the world goes into recession, base metals, in particular iron ore, will do poorly. If gold does well, and AUD weakens, Australian gold miners might be very interesting for foreign investors
    • TM
      The-First-James M.
      15 June 2017 @ 14:03
      I think re. the Aussie housing market, Libor is something you need to be keeping an eye on. Off the back of yesterday's Fed Funds Rate increase, there's a strong probability another 'out of cycle' (as the Aussie MSM call it) mortgage rate increase is now imminent.
  • AH
    Andreas H.
    15 June 2017 @ 11:40
    Very, very good! Best: "I am not an economist"!!!