We have had* a high regard for the Economic Cycle Research Institute (ECRI) for many years, and a recent report from them has clarified why that regard was not misplaced. They show that if an investor had sold when they detected recessions coming and bought when recoveries were forecast the results for a recent 9 year period would have been that $100 would have grown to $147 during a time when Buy & Hold would have dropped to $72! Seeing their record prompted us to compare the totally independent record for this Letter in making similar ‘calls’. The National Bureau of Economic Research (NBER) is the official arbiter of when recessions start and end. Here are those results:
| ECRI: | This Letter: | |
|---|---|---|
| 9/13/2000 "danger now shifting from inflation to recession?" | 9/29/2000 "The possibility of recession in 2001 is very real?" | |
| 3/1/2001 "Recession no Longer Avoidable?" | 3/1/2001 "mild recession a done deal" | |
| RECESSION START: 3/2001 (Confirmed by NBER 11/26/01) | ||
| 11/8/2001 "should be ending near or shortly after the end of this year" | ||
| RECESSION END: 11/2001 (Confirmed by NBER 7/17/03) | ||
| 12/20/2001 "recession will end by February" (the only one of 650 to raise my hand at an Economic Forecast meeting - mentioned in 1/31/01 Letter) | ||
| 1/25/2002 "the economy will start its recovery at the end of this quarter" | ||
| 2/7/2002 "recovery at hand" | ||
| 4/1/2006 "while it is unlikely that a recession will start in 2006, it is not unlikely for one to occur in 2007 or perhaps 2008?" |
||
| 4/1/2007 "the chances of recession are indeed high" | ||
| 8/14/2007 "recession in sight? | ||
| 11/2007 "2008 looks like a recessionary year which may actually be dated to this quarter of this year" | ||
| RECESSION START: 12/2007 (Confirmed by NBER 12/1/08) | ||
| 1/6/2008 "Recession is here now" | ||
| 1/25/2008 "ECRI has not yet forecast a recession" (Oops - J.S.) | ||
| 3/31/2008 "on recession track - too late to head off recession" | ||
| 11/1/2008 "an end by mid-2009 - seems reasonable to me" | ||
| 4/30/2009 "end of recession in sight, probably by end of summer" | 4/30/2009 "Recession is winding down" | |
| 5/29/09 "June does, indeed, look entirely possible as the end of this recession" | ||
| 6/30/09 "The recession is ending - over and out" | ||
| RECESSION END: 6/2009 (Confirmed by NBER 9/20/10) | ||
| 8/31/09 "Now we know it has ended" | ||
| 9/25/09 "Yes, it's over" | ||
| 9/2/10 "there's a greater than 50% chance of recession" | 9/1/10 "an 18% chance of (a double-dip) recession" | |
| 10/29/10 "No double dip recession" | 10/30/10 "the next recession would seem to be far in the future" | |
| 9/21/11 "Tipping into Recession - a done deal, can't be avoided" | 9/30/11 "looks like a coin toss 50% chance to me" | |
| 10/31/11 "We are now forecasting no near-term recession... we think they (ECRI) will be wrong this time" | ||
| 11/7/11 "Recession call intact" | ||
| 5/11/12 "our research shows a new recession is likely to start by mid-2012" | 6/1/12 "50-50 position is appropriate. I always like to be invested inverse to the percentage that a recession is likely, and I am not yet in the recessionary camp" | |
| 7/10/12 "I think we're in recession already" | 9/4/12 "..this economy keeps muddling through without a recession, a position which I continue to hold" | |
| 12/7/12 "looks like the recession began around July 2012" | 11/7/12 "..we are not in a recession and one does not look likely.." | |
| 1/21/14 "the epicenter of recession was the end of 2012 into the start of 2013" | 12/31/2013 "No recession in sight...We enter 2014 with a positive outlook." | |
| 5/8/15 "That recession call did turn out to be a false alarm" | 4/30/15 "we think the economy is more likely to continue to ‘muddle through’ as has been the case throughout the recovery from the last recession. | |
| 10/15/15 "So, even though a U.S. recession is not yet at hand, a 2016 recession could push down already-low... CPI growth into deflationary territory" | 6/30/15 "We still are not predicting a recession in the near future" | |
| 1/29/16 "..not previously anticipated a recession on the horizon for 2016, we now see some things that could be pointing to it" | ||
| 3/16/16 "Not going into recession, not on the cusp of one" | 3/17/16 "..it is susceptible to falling into another recession in the year or two ahead". | |
| 6/2/16 "..a recession starting late this year or early next year cannot be ruled out." | 6/1/16 "..to date we don’t believe one (a recession) is upon us." | |
| 4/19/17 "From a near-term, cyclical point of view, our analysis of the outlook is unambiguously positive." | 3/1/17 "Certainly no recession is in view..." | |
| 4/18/19 "If our leading indexes turn back down, there may be a recession later this year." | 7/1/19 "Let’s worry about 2020 and beyond as we get a little closer and can see more clearly." | |
| 8/14/19 “With the recent yield curve inversion, the markets are again racing toward a U.S. recession forecast” | 9/1/19 "When, not if, a recession is coming is the topic of the day..." | |
| 10/9/19 "..the “Yellow Flag” of recession risk is waving." | 11/1/19 "Its time to worry about IT...the “IT” I refer to as recession." ... a recession is ahead.... | |
| 3/3/19 "If we end up sidestepping a recession – not because of the Fed’s actions but because of the economy’s cyclical resilience and the efforts of medical professionals - " | ||
| 3/17/19 "A recession is increasingly unavoidable." | ||
| RECESSION START: 2/2020 (Confirmed by NBER 6/18/20) | 2/1/20 "..even if a recession is not on the horizon, and we all know it is." | |
| 3/1/20 "..which suggests (are you ready for this?) we may be in recession already....a recession, which when the National Bureau of Economic Research (NBER) decides in the future when it started will find it was in February of 2020." | ||
| 8/27/20 "We have an expansion which is going to continue" | 9/1/20 "..the low point has been seen and the recession is over!" | |
| RECESSION END: 4/2020 (Confirmed by NBER 7/20/2021 | ||
| Mid-May 2022 "we warned people in a CNN op-ed to prepare for recession that could begin as soon as this year." | 8/1/2022 "We believe it is accurate to say a U.S. recession may track from around now |
*Now you know why we have have had high regard for ECRI – they generally agree with us!! But we haven’t agreed with them on their September 2011 recession call: “…we think they will be wrong this time” (10/31/11). Finally, on May 8th, 2015 they acknowledged that their recession call had been “a false alarm”. We are not economists, and neither are they, but knowing the status of the economy at any given time gives investors a leg-up to make money in the stock market, and that’s the point of this Special Report and of our Market Letter.
Jack Schannep
for the Schannep Team