|ECRI Weekly Leading Index going back to 2005 (Source: ECRI)|
Interesting points Achuthan made during his interviews.
- During recessions you get in a vicious cycle of "lower sales, lower production, lower employment, lower income, and back to lower sales."
- Sees deadly combination of contagion in non-financial services, manufacturing and exports.
- Government spending will go up as tax receipts go down.
- Recessions kill inflation.
- We're in an era of more frequent recessions and bear markets, which elevates the equity risk premium and lowers government bond yields (like in Japan).
- 1799-1929 90% of expansions were 3 years or less, 1970-1981 2/3 expansions were 3 years or less.
- If there's an exogenous shock like the Lehman bankruptcy, but in Europe, recession could overshoot.