Respected think tank repeats recession call for this year

The Economic Cycle Research Institute has repeated its call for a recession “by mid-year.”

Back in October, the Economic Cycle Research Institute issued a forecast for a recession starting in mid-2012.  At that time, it seemed easy to believe: In the three months leading up to the forecast, the stock market had dropped 15%, US Treasury debt had suffered a historic downgrade, and the Euro zone crisis was still heating up.

But now, consensus has shifted toward the view that the US economy is strengthening.  The stock market has bounced back, official employment statistics reflect growth, we have become comfortable with AA-rated debt, and those Europeans always wrangle about Greek debt. So what’s to worry about?

The facts ECRI points to are that the rate of economic growth in the US peaked 21 months ago, and every time over the last 50 years when the growth rate slowed this much, a recession has followed.  We’ll see whose forecast is right, later this year.