Duplicity of Claimed Forecasts

Ok, ok, I'll spend about 30 seconds of digital ink on this one, since I was asked to and it is so simple to demolish their arguments.

ECRI is claiming that:

"With WLI growth rocketing up almost 30 percentage points in six months, it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

Yeah ok. 

In the same press release:

It was ECRI's highest yearly growth reading since the week ended October 26, 2007, when it stood at minus 0.6 percent.

How'd that stock market forecast work out if you believed in only a "small" decline in October of 2007?  Anyone remember where the SPX and DOW were then?  Good.  Where are they now?

The weekly index rose in the latest week because of higher commodity prices and stronger housing activity, Achuthan said.

Uh huh.  Higher indirect taxes on over-encumbered and laid off consumers (which is what higher commodity prices do) is a sign of positive economic conditions to come?

Again - how did that work out in 2008, when oil went to $150/bbl?

By the way, the reading that they now say is "about where it was in October of 2007" led them to say this at that time:

"With GDP, nonfarm jobs, personal income, and manufacturing and trade sales all at record highs in their latest readings, .... the key coincident indicators that determine whether the economy is in a recession show quite clearly that it is not..... In other words, future data revisions aside, there is little indication that a recession has already begun.

and

The difference this time is that even through the shocks have arrived, good leading indexes like the USLLI are not yet showing recessionary weakness, whereas in the past such recessionary vulnerability was followed by the shock.  This is a key reason why the economy is not yet in a recession.

.... However, this weakness is not pronounced, pervasive and persistent enough to be recessionary.

They then go on to hedge their bets, like all people who want to be able to say they were right no matter what happens.

Why do I bother with people like this; my predictions are still out there for 2008.  More to the point, however, this is what I said in late October, roughly when their newsletter was released:

• Your house is going to go down in value by 30-50%. If you bought it after 2003, you will be underwater for certain. If you have more out in mortgage(s) and HELOC(s) than its 2003 value, you will be paying for an asset that is worth less than you owe. That's a fact. If you are forced to move in that situation, you will be rendered bankrupt. Congratulations.
• The stock market will collapse. The S&P will see 800 again. Believe it. It will come. Perhaps not tomorrow, but it will happen. It is inevitable. It could be far worse. We could see 500 on the S&P 500. If you don't get a crash, it will only be because your money will be worthless; a 1500 S&P with a 50% devaluation of your purchasing power is the same as a 750 S&P - and buys just as much. That's the game being run. It won't work - we'll get a devalued currency and a market crash - the worst of all worlds.
• We will get a deep, long recession. Believe it. It is coming. I know you don't want to hear it, but its true. It is inevitable. It could have been a deep, sharp but short recession, but Bernanke and the Federal Government will not make the right choices and you, collectively, have not put any material amount of pressure on them to do the right thing. Count on that. As a result, the next decade is going to suck.
• Foreigners will not come in and save our markets and assets. There are other parts of the world that haven't mortgaged their futures. Oh sure, China and India have problems - big ones - in their own asset bubbles. But they, along with the Japanese, at least save some of their incomes. They've got the base to build from. We do not. The "hot money" will go where it can earn a return and where there's something to build ON. That's not the United States any more. All we have are 6,000 nuclear weapons.

Along with a couple more things, including a prediction for $5/gasoline (just missed on that one, but the ramp from October 07 was still pretty severe.)

Oh, unlike ECRI, I don't redact my "public" stuff either.  By the way, why DID they black that stuff out?

You tell me: how'd I do?

And guess what - unlike ECRI, I don't charge for those forecasts either.  Mine are free and they're not "black boxes" - they're observations and predictions, with the reasons for my belief set forth where you can evaluate them.