Two weeks ago ECRI stated they don’t rely just on WLI to make a recession call. No quarrel there. Their position: The Long Leading Indicator, USLLI has not shown enough downward movement yet to make a call. I have previously reported, that to the contrary, LLI has recently trended downward longer than it did when it signaled the 2001 recession.
Last week ECRI stated that LLI had not shown as much downward movement as it had in the only previous double dip recession in 1982. Fair enough, but there is no significance in LLI anticipating a double dip recession or one more typically spaced.
ECRI has already declared the 2007-9 recession over, so a double dip would not in any way be connected to it. What we have now is just another garden variety call to make or not to make. Making the case as they did, that ECRIs current indexes have not yet shown as much downtrend as they did in ’82 proves nothing, when there are easier hurdles to cross like the 2001 recession.
This week ECRI says WLI had dropped more at least one time in the ’50s, that was not followed by a recession, than it has this time around. Ok, but all we have to do is make our case that ECRIs indicators now exceed the numbers in 2001.
When someone answers the same question differently each time that tells me they don’t have an answer they are comfortable with.
Its time for ECRI to tell us why they called a recession in 2001 and why they have not as yet this time? What’s different this time and why are they holding the call back?
ECRI says a double dip is not a sure thing. I maintain the odds of a double dip are now 65% . Saying the odds are 65% also says its not a sure thing. No real difference except they have not made a call.