Top Economist Flags Warning Signs Of Possible Recession In US Economy: 'It Certainly Is An Indication...'

The U.S. economy could be on the brink of a recession, according to Lakshman Achuthan, co-founder of the Economic Cycle Research Institute (ECRI) and business-cycle expert.

What Happened: The ECRI’s Leading Economic Index, known for its near-perfect track record, has been on a downward trend for the past year, Business Insider reported. Despite a recent leveling off, past patterns suggest that a dip in this index often precedes a recession.

“That, while is not a guarantee of a recession, it certainly is an indication that there’s a lot of vulnerable to shocks,” Achuthan warned.

“More often than not, it really speaks to cyclical vulnerability.”

Other economic signs also point to a decelerating U.S. economy. Predictions for GDP growth in the first quarter indicate a significant slowdown, with the Atlanta Fed forecasting only a 2.5% expansion. The U.S. Coincident Index, which incorporates GDP, job, and retail sales data, has hovered near 0% for the past two years.

See Also: Private Employment Grows By 184,000 In March, Tops Expectations: ‘Pay Is Heating Up’

Achuthan also mentioned deteriorating hiring conditions. Despite seemingly robust job growth, the unemployment rate has been rising steadily, hitting a two-year high in February. The ECRI’s Cyclical Labor Conditions Index, which tracks cyclical labor impulses, has seen a substantial decline, echoing patterns seen before past recessions.

Why It Matters: Achuthan’s observations suggest an economic “tug-of-war”. If external supports like pandemic stimulus spending and labor hoarding wane, it could spell trouble. Other economists, such as David Rosenberg, have also cautioned about a potential downturn, particularly as inflation could persist and the Fed may maintain higher rates for an extended period.

This comes at a time when President Joe Biden has been asserting that the economy is ‘strong,’ despite 50% of voters feeling their financial situation is deteriorating.

Additionally, concerns have been raised about the risk of Baby Boomers going broke, with their retirement accounts full of ‘fake assets’ plunging, as warned by Robert Kiyosaki, author of “Rich Dad, Poor Dad.”

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