I had some time to kill this afternoon and sat down to watch the boob tube (like I said, I had time to kill).
After flipping through several channels, I landed on CNN, where a host of "Your $$$$$" announced that a guest would be joining them after the break who was not only one of the first to call the current downturn, but who was now claiming that "the end of the recession was in sight."
Naturally, my interest was piqued, and I put down the remote for a moment as a flurry of commercials flashed by.
When the program continued, I learned that the "expert" making this prediction was Lakshman Achuthan, managing director of the Economic Cycle Research Institute (ECRI). Apparently, his research group had recently made the following announcement (via Reuters):
"The economy is on the cusp of a growth rate cycle upturn -- a cyclical acceleration in economic growth ..In other words, U.S. economic growth ... which is still plunging deeper into negative territory, will start becoming less negative in short order."
Hmm, interesting. OK, I thought, let's do a quick Google search to try and verify the firm's alleged forecasting prowess in regard to the current recession-cum-depression. Below are two of the reports I found [Italics mine]:
"Gauge of U.S. Economy Falls in Latest Week - ECRI" (Reuters, Dec. 29, 2006):
The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index slipped to 138.5 in the week ending Dec. 22 from 139.7 in the prior week, due to higher interest rates and more jobless claims.
However, annualized growth in the week ended Dec. 22 rose to 3.8 percent from 3.4 percent in the prior period, a reading not reached since last February.
"Given the steady improvement in the WLI, recession is no longer a serious concern," said Lakshman Achuthan, managing director at ECRI.
"Achuthan of ECRI Sees U.S. Slowdown But No Recession: Audio" (Bloomberg, Nov. 16, 2007)
Lakshman Achuthan, managing director of Economic Cycle Research Institute, talks with Bloomberg's Tom Keene in New York about Americans' concerns about the likelihood of a recession, the outlook for the U.S. economy and the impact of the dollar on inflation.
So much for being ahead of the curve! Aside from the fact that one of the worst downturns this century (which had been correctly anticipated by yours truly and other [mostly] non-economists) began only a month after ECRI discounted this possibility, it took a further three months for the "forecaster" to acknowledge what many ordinary Americans already knew was taking place (see "UPDATE 1-Leading Index Shows US Economy in Recession, ECRI Says").
My first question is: Why do ECRI's opinions about the future matter?
And my second question is: Is it any wonder that the mainstream media keeps losing credibility -- and its audience?