Economy
In reply to the discussion: Weekend Economists Waiting for FDR July 13-15, 2012 [View all]xchrom
(108,903 posts)ttp://www.businessinsider.com/deutsche-bank-rule-of-10-predicts-recessions-2012-7
According to most experts, the U.S. is still growing. However, some experts like Lakshman Achuthan and Albert Edwards argue that the U.S. is in a recession.
"Frequently, in the early stages of recessions or during growth soft-patches, there is not a clear consensus among forecasters as to whether or not a recession is actually occurring," writes Deutsche Bank economist Carl Riccadonna.
The issue is that economists opposite sides of the argument weight different metrics differently.
But Riccadonna and the economics team at Deutsche Bank have an incredibly reliable indicator of recessions.
They call it the "rule of 10%" and it's an interpretation of the U.S. weekly initial jobless claims. Riccadonna explains:
Our rule of thumb is as follows: In the past, when jobless claims backed up by 10% or more from the prior quarters average, in all but one instance (Q1 1967), the economy was on the brink of recession. Thus, the rule has proven to be fairly reliable over the past several decades.
Here's his chart showing the record of this indicator: