“2020 Recession Is Not Off The Table” – Positive Jobs Report Doesn’t Tell The Whole Story

Via Real Vision,

Despite a positive jobs report in December, the growth rate cycle slowdown will continue into early 2020 and include a weaker performance out of the jobs market, Lakshman Achuthan, COO and co-founder of ECRI told Real Vision’s The Interview.

Good discussion about why ECRI’s calls can diverge from the consensus, a review of our 2019 calls, and what’s ahead with @edwardnh and @realvision. Taped on December 9, 2019. Watch the long-form interview here:https://t.co/aEk3Vqgoph

— Lakshman Achuthan (@businesscycle) December 31, 2019

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Achuthan said the unemployment rate may have reached a record low at 3.5%, but in the construction sector – a key sector of the economy – unemployment is up almost 2%. And manufacturing has seen almost a 1 percentage point rise in the unemployment rate.

He said these are among the indicators that the cycle is still moving to the downside, and said while he doesn’t think a recession is imminent, it’s also not an impossibility.

“I think a recession is not off the table at all in 2020, and so there is no green light on that score,” he said. “We do have green lights in Europe, Asia ex Japan, maybe even global industrial growth getting its legs. But that does not mean the US can’t still cycle down between now and whenever it catches something on those cycles.”

Achuthan said he sees a few upticks in long leaders and even in a few shorter leaders like financial services, but in order for it to be an objective upturn, it has to be pronounced in those leading indicators.

“It has to be pronounced. It has to persist. And it has to be pervasive,” he said.

“It has to be the majority of the drivers contributing to the rise. As of today, there’s no upturn. Until you see the three P’s to the upside, we just don’t have that.”

Here’s the full interview of Achuthan and Real Vision’s Ed Harrison discussing ECRI’s indicators and what they are saying about the business cycle. 

[youtube https://www.youtube.com/watch?v=fG99mM1eEMo?start=1028]