Investment

» definitionofis - NYT: Fork in the Road

In response to NYT: Fork in the Road posted by ECRI:
This view regarding tame wage inflation is now thrown out. But why is the Census Bureau data so very wrong?:

"In its annual report on the economic state of the nation, the Census Bureau said yesterday that median household income rose 1.1 percent last year, after adjusting for inflation, but the increase was apparently a result of payments that come from the government and from investments, not from paychecks. The earnings of full-time workers failed to keep up with inflation."

Here's agraph of the latest wage inflation data:
http://www.prudentbear.com/Charts/Commen...

I grabbed it from Doug Noland's latest analysis of the impact of wage inflation:
http://www.prudentbear.com/archive_comm_...

-- posted by definitionofis

» ECRI - CNBC TV Interview Today

In response to CNBC TV Interview Today posted by Kirk:

Hi Kirk,

Yes, you did get the gist of the interview correct - thank you.

Re: drivers of inflation, energy prices are included, along with other sensitive industrial material prices, i.e., the JoC-ECRI Index. Other drivers of inflation include jobs, bottlenecks in producton, broader import prices, money supply proxies, etc.

Have a great weekend. Also, I taped a couple of sound bites for Nightly Business Report this evening. I have no idea what they'll end up using, but FYI.

-- posted by ECRI

» Jas_Jain - One Mr. Moore Sees Recession

--

‘Hugh Moore, partner at Guerite Advisors, says his firm has developed a proprietary economic model that would have predicted all seven recessions since 1960. The indicator is again flashing a ‘high-risk’ signal. ‘When you take the slowing of the economy and you place on it the largest housing bubble since 1955, I don’t see how we’re going to avoid a recession,’ Moore says.

http://www.businessweek.com/investor/con...

BTW, the talk of a recession is gaining momentum by the day. And it is no idle talk either. It would be interesting to see who call the next recession 6 months ahead of time and who can’t.

Jas

-- posted by Jas_Jain

» Jas_Jain - Re: America's 'Hollywood economy' [ECRI mentioned]

From: Joseph
Subject: America's 'Hollywood economy'
Date: Tue, 19 Sep 2006 08:53:24 -0400

http://www.marketwatch.com/news/story/St...

1. The forecasting skill of economists is on average about as good as guessing. In fact, predictions by the politically driven Council of Economic Advisors, Federal Reserve Board and Congressional Budget Office were often worse than guessing.

2. Economists cannot predict the turning points in the economy. Of 48 predictions made by economists, 46 missed the turning points.

3. Economic forecasting accuracy declines with longer lead times.

4. No economic forecasters consistently lead the pack in accuracy.

5. No economic ideology consistently produces superior forecasts.

6. No economic forecaster has consistently higher forecasting skills predicting any particular economic statistic.

7. Consensus forecasts do not improve accuracy (although the press loves them).

8. Psychological bias affects forecasters and their forecasts. Some economists are naturally optimistic and bullish, others are consistently pessimistic bears.

9. Increased sophistication provides no improvement in forecasting accuracy. Remember the Long-Term Capital Management hedge fund? Two brilliant Nobel Economists backed by Wall Street's elite nearly sabotaged the world economy.

10. Finally, Sherden says there's no evidence that economic forecasting has improved in recent decades. In fact, forecasting appears to be deteriorating as partisan politics, Wall Street gaming and unpredictable global events invent new illusions.

I would only disagree that the good folks at ECRI have a pretty good track record and are balanced and research driven.

Yes, Joseph, the economists at ECRI, after Moore, have caught the same disease as the rest -- never be wrong in predicting a recession and it is OK to miss a recession call or be late. The best time to predict a recession for economists is after it has already started because by then the evidence is hard to ignore. Economists don't suffer in reputation for not forecasting a recession but they do suffer if they forecast a recession and it doesn't occur. We are not dealing with science here, but rather in voodoo to make people feel better. You make Americans feel better and you make more money, which is the overriding goal of almost all economists.

BTW, academics have the worst record in economic forecasting and Bernanke is an academic. Do people remember what the Harvard Economic Society, which was shut down, had to say during 1929-30? And do people remember what Goldman Sachs did to “investors” in late 1920s? Goldman Sach’s power and reputation today are the best predictor of the American economy’s future -- into the rat hole.

Jas

-- posted by Jas_Jain

» ECRI - Re: America's 'Hollywood economy' [ECRI mentioned]

In response to Re: America's 'Hollywood economy' [ECRI mentioned] posted by Jas_Jain:

Jas, Can you clarify in your posts who is saying what? It seems as though your most recent post here has 1) an excerpt from a Marketwatch article, 2) a comment from someone named Joseph, and 3) a comment from you. Is that correct? Thanks, Lakshman

-- posted by ECRI

» definitionofis - NYT: Fork in the Road

In response to NYT: Fork in the Road posted by definitionofis:
Apparently the difference might be older data, plus one data set was including health benefits and the other was not. I think benefits should be included in wages (thus wage inflation is high) since health industry growth and inflation is a major economy component.

-- posted by definitionofis

» ECRI - WLI at 9-month low

NEW YORK, Sept 29 (Reuters) - A weekly gauge of future U.S. economic growth reached its lowest mark since December 2005, a report showed on Friday, and its annualized growth rate was also down.

The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index fell to 135.1 in the week ended Sept. 22 from a downwardly revised 135.5 in the prior week, matching its lowest level since Dec. 23, 2005. The highest mark during that period was 138.6, in the week of Jan. 20.

"With the Weekly Leading Index at a 9-month low, the hoped for revival in U.S. growth is not in clear sight," said Lakshman Achuthan, a managing director at ECRI.

The index level declined due to weaker housing activity and lower industrial prices, countered by higher stock prices and lower jobless claims, Achuthan said.

Annualized growth in the week ended Sept. 22 slipped to minus 0.9 percent from minus 0.8 percent in the prior period.

Note: we're uploading a revised version of our website from a new server this weekend, so there may be a temporary outage late Saturday evening.

-- posted by ECRI

» Jas_Jain - Re: WLI at 9-month low

In response to WLI at 9-month low posted by Kirk:

Very bad news for "stock" market bulls.

I am e-mailing Kirk a chart with the following title:

ECRI's Weakly Leading Index (WLI), 29-Month Change;
Notice That The Drop Is Lot Sharper Than That Preceding 2001 Recession
Every Netagive Reading Was Followed By a RECESSION NO LATER THAN 4 Months (Usually Economy Was In RECES)

He is free to post or send to Lakh. The 29-Month change in the WLI is NEGATIVE right now.

Jas

-- posted by Jas_Jain

» Jas_Jain - Re: WLI at 9-month low

In response to Re: WLI at 9-month low posted by Kirk:

--

"Is not true as shown on the chart you sent me."

Would you care to point out which period you are talking about? Just after a recession, you have a carry over for 1-2 years. If you take a 29-month change, the reading for 1-2 years reflects nothing more than the fact that WLI takes a long time after a recession to turn up. It is a very bad indicator of the coming recovery. Yield-Curve, on the other hand turns up before the recovery.

Kirk, you have not fully studied WLI and Yield-Curve's usage in recessions and recovery forecasting.

I am fairly certain that ECRI will be late in uttering the R word just like in 2001. Anyway, we shall find out in less than 6 months because all indications point to a recession within 6 months.

Jas

-- posted by Jas_Jain

» Jas_Jain - Anirvan Banerji of ECRI Sounded Quite Bearish

October 03, 2006

Anirvan Banerji of ECRI Sounded Quite Bearish

He appeared on Bloomberg this morning. He hinted that slowdown shows no signs of revival. He said that in two months it would become clearer if the economy is headed into recession. I think that ECRI will make its recession call in 2-3 months and that is when the recession most likely would begin.

He thinks that the Scam Market is getting it wrong and he compared it to the 2001 Scam Market, in denial of a recession, which went up only to fall a lot.

Jas

-- posted by Jas_Jain