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Fri September 16, 2011
Economist: U.S. Skating On Thin Ice
Last year economist Lakshman Achuthan said he thought the United States had emerged from the depths of a recession, but today the picture looks a bit more grim. Unemployment is hovering above 9 percent and there were no new jobs created in August. On top of that, consumer confidence is at its second-lowest level of the year.
"We are skating on very thin ice," Achuthan tells Guy Raz, host of weekends on All Things Considered.
Achuthan says the jury is still out on whether the U.S. will go into another recession, but he suspects that it will be clear one way or the other by the end of November.
Caution: Economy Slowing Ahead
Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute, says all of his economic indicators point to more sputtering ahead.
"The risk of a new recession is quite high," he says.
If we do have a double-dip recession, Achuthan says, the people who are already having trouble finding work and paying bills are already in a depression and that they "are going to suffer more."
"It poses massive problems for policymakers because a new recession automatically increases all of these expenditures out of the public sector, while at the same time dramatically decreasing all their revenue," he says. "So there's even less ability to help the people who are hurting the most."
This Time Is Different
Some economists argue that right now we are just in a period of slow growth, not unlike that of the early 1980s. They say there are signs of a turnaround in the near future. Achuthan argues there is no evidence to support that point of view.
"This is very different than the early 1980s. The issues that ail the U.S. economy and the jobs market today are not things that result from nearby events. What we're living through and dealing with now has been building for decades," he says. "If you look at the data, you see that the pace of expansion has been stair-stepping down ever since the 1970s, on all counts — on production, how much can we produce, how many jobs can we create, how much money do we make, how much do we sell. These are all trending down."
So, Achuthan says, "those who were expecting we should have a vigorous recovery had no right to do so."
In fact, he says, it is likely that the U.S. will see more frequent recessions than it's used to for the next five or 10 years.
"The best news I can give you is that cycles do turn, but there is going to be a lot of pain in between," he says.