The crisis is dead, long live the crisis

In the prediction of July 13 Macroeconomic Advisers, the consulting company in St. Louis, which makes the monthly GDP index for the U.S., announced that if the index for the second quarter is negative at a rate of -0.1%, then the next he should reach 2.4% . Does this mean an end to the recession? Indeed forecast that the economy has reached bottom, and thereafter shall refund became a favorite of analysts from the U.S. so far in 2007, but Economic Cycles Research Institute believes that it is exactly what should be expected. And analysts surveyed by the institute that the economic cycles of decades and was one of the few predugadili two successive recession. According to executive director of the ECRI Lakshman Achutan most often following indicators (such as unemployment, retail sales) are the most commonly matched (ie, reflecting the simultaneous movement of many sectors) or delayed (ie, already reflect past actions) and therefore not indicative of the direction that will take an economy. The Institute offers another method. He divided the factors into three categories: «foresight ‘long-term indices,« advanced’ short-term indexes and «foresight“ weekly indices. To evade their hopes for rapid recovery or long recession of concern, they advise investors to seek the three «P“, ie, pronounced (pronounced) increase (promotion) of the following «foresight“ index, which continues (proceed) at least three months, and several indicators of movement in one direction. Long-term «outsail“ does not include exchange rate movements, but the account of the credit activity, habitat (living conditions), productivity and profits of companies. In periods of recession they reach the bottom and start to rise about six months before the end of the crisis. Weekly «outsail“ index allows forecasting of the changes about 3-4 months earlier. Short «foresight“ as the stock indices movements and applications for unemployment benefits increased permanently only at the end of the period before the restoration. Achutan commented that the last time the three groups of indices are green: long-term indicators have begun to increase in November last year, weekly, from December, reaching a short-its lowest level in February this year. One after another, from April all increased, which may mean that the recession will be practically completed by the end of summer. However, good news, according Achutan are depleted. One of the main indices in the pattern of institutional level of unemployment remains unsatisfactory. According Achutan means that the situation will be repeated at the end of the crisis in 2001 – then the service sector began to hire people, but in the industry cuts continue until 2003 because predkrizisniya period of expansion has been employed too many employees. Workplaces are determinant, but unemployment and recession are not synonyms, states Achutan. Reversal in the trend of increasing unemployment, as it may occur after the end of the year. The high level of unemployment, which will remain after the recession, according to ECRI, means that «the better health of the economy will remain relatively. It will affect job creation, growth of wages and social benefits. The labor market will need a much stronger incentive to make a turn, and now the Institute sees one. What is concluded? Recession goes, unemployment remains. Or otherwise: the crisis is dead, long live the crisis.