A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Big Three Depression Risk

The U.S. auto industry weathered the Great Depression. But there are some fears that its current crisis could cause another one.

During a hearing on a proposed $25 billion federal bailout of the industry Wednesday, GM CEO Rick Wagoner used the D word to describe what might happen if Congress didn't approve some sort of rescue package...

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, estimates that if 2 million jobs are lost in the next six months, it would represent a loss of almost 1.5% of the job base. That's a big bite to take out of the economy in such a short period. The last time it lost such a large percentage of its jobs that quickly was during the painful recession of 1982.

But Achuthan points out that the the economy has lost more than 1.5% of its jobs base over a six month period four times since the end of World War II, and none of those increases in joblessness caused a depression.

Still, Achuthan is in favor of a bailout for the Big Three and said it would help save jobs.

"Forget about the semantics of depression, it makes no sense to accept that size of job losses when the economy is falling off the cliff," he said...."