Monday, January 18, 2010

A Pair of 2010 Outlooks From Different Perspectives

Leading economic indicators are numerous and important tools for analysis of economic trends. I understand their importance and will create a scheme to monitor some of them while I learn more about their applications. In exploring the site of the Economic Cycle Research Institute (ECRI), I discovered a video clip from December 31, 2009 of a CNBC interview of Lakshman Achuthan from ECRI and Patricia Chadwick from Ravensgate. Here is a link to the CNBC Video, the title is Market Task Force. They are making 2010 outlooks coming from two different perspectives, empirical economic indicators (ECRI) and fundamental analysis with an emotional reality factor (Ravensgate). Despite these different approaches, they may arrive at the same place.

Briefly, Achuthan describes his outlook as seeing the recovery continue into 2010. He also describes his conclusion that a "global industrial slowdown is going to happen." He emphasizes he is not making a recession call but warns that his belief "leans against optimism for emerging markets that like to export a lot of stuff". Chadwick also supports the recovery in early 2010 thesis. She observes that the "corporate world is fine" and points out that the consumer is not able to de-leverage and "create the final demand that will keep the economy going very, very strongly".

There is one statement made by Achuthan that keeps me on 'skeptic alert'. Based on his expertise as a student and writer on economic indicators, he states that there are some occurrences in cycle behavior that always happen. I am having a difficult time accepting that premise now, after watching the loss of confidence in the entire group of Wall Street economists for being so unaware of the developing crisis we know was predictable. I will explore the premise further. I have to remain open to old tried and true concepts that have recently failed as much as to new-to-me concepts that have recently gained credibilty. Scanner