Its not time to concede my recession call

1/17/2013

The Philly index has been readjusted downward in December, and missed big time today. The Fed to the rescue in the repo market. Zerohedge.

2 Comments

Brent Buckner

1/17/2013 11:13:31 pm

Which one?

"Since I have been expecting a US recession since summer 2011, I guess if it doesn’t show up by the end of the summer 2012, I will admit to being wrong.

On my timing."

or

"US entered a recession in Q3." - or were you just quoting Hussman, not making that claim yourself?

or

"i would say that if the US isn't in a official recession by Mar. 2012 [sic - you must have meant 2013] I will admit to being wrong."

Karl

1/18/2013 05:30:04 am

The great recession began in Dec. 2007 but most of us became aware of it in Sept. Oct./2008. This is a 9-10 month gap.
Yes- You were correct in the last line -I meant 2013, and have corrected this on the original post.

My own view on my past comments is this. I expected a global recession prompted by the Eurozone crisis and other global imbalances. I expected this might have already arrived. It hasn't. In that sense I am already wrong. I expect the CB can kicking has moved that global recession forward by 6 months fto Q3 of 2012. This would prompt a series of revisions (like the phillly one referenced in this post. and would be called 9 months after its start date. That would be late March early April. That is my current state of beliefs. If a recession in's called sometime in Q2 my views would once again be wrong.
More broadly to the point is whether the CBs can engineer a lasting global recover and avoid what the market calls "tail risk" and what I would call a historical level crisis provoked by systemic imbalances. (You say tomato I say tomahto.)
So far the CBS have taken a tail event of the table -so far I am wrong.
I feel out of step with general sentiment much in the same way I did in 2007. Having called for a global recession by the end of 2007, based on the US housing crisis and $40 oil, the only one of 18 economists at my shop. I was perplexed and wracked with self-doubt in 2007. Since then I have also correctly called for slower growth due to deleveraging, persistently high unemployment and an accelerating in capital investment that eliminates workers. Much of my unconventional baseline macro view has been correct (unconventional when I started saying it in 2008-2009).
More recently my perspective on my prognostications has changed.
I was very correct about 2007, but this has proven of little worth to me professionally. Potential employers don't know what to do with some like me. The world in some form or other has no value for this type of analysis. I have now returned to the world of academic economics which relies on deductive mathematical logic and physics equations. Success is measured not by accurately predicting turns or watershed moments for global imbalances. These models can't predict anything; the DSGE models that increasingly dominate macro are evaluated on how well they match moments after calibrating shocks.
So I am less interested then before (but I still do)in offering my opinions and being correct or not b/c I see it as a lose -lose proposition in some ways.
If I am wrong I look foolish. If I am right -I appear like a lucky arrogant weirdo. I have spent most of my life in the later space, but certainly have had my share of looking foolish.
I have students to teach, academic papers to write and a brother who is dying. The world is just going to have to take care of itself.

Its not time to concede my recession call

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