The market has moved violently up and down all year in a wide trading range, and today we sit today right about where we were when the year started. During up swings in the market optimism turns up and "the recovery is back in place." During down swings pessimism returns and we are "heading into a recession."
It is important to listen to economists and financial analysts who do not change their opinion based on a short term movement in the market. One of those economists is Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute.
ECRI's leading economic indicators triggered their call on September 30th that the United States would re-enter a recession within 3 quarters (based on the classic definition of 2 quarters of negative GDP). He has come back on Bloomberg television today to re-confirm that outlook.
My personal outlook is that the United States entered a depression in December of 2007 and what we have seen since are smaller reflation/deflation cycles within the larger trend. I believe we have one more major deflationary period ahead of us before the final reflation of the current depression.
Achuthan on the next leg down:
