U.S. Tipping Into Another Recession, Achuthan Says

The world’s largest economy is showing signs of slumping, said the Economic Cycle Research Institute’s Lakshman Achuthan, citing leading indicators.

“The U.S. economy is tipping into a new recession,” Achuthan, the group’s chief operations officer in New York, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “You have wildfire among the leading indicators across the board. Non-financial services plunging, manufacturing plunging, exports plunging. That is such a deadly combination.”

The Federal Reserve’s efforts to support the economy, including holding its benchmark rate at virtually zero since December 2008 and expanding its balance sheet to a record $2.88 trillion -- have done little to reduce unemployment that has hovered around 9 percent since April 2009 or to revive the housing market.

The U.S. economy grew at a 1.3 percent pace in the second quarter after a 0.4 percent expansion in the first three months of the year, the Commerce Department reported yesterday. It earlier estimated that gross domestic product grew 1 percent from April through June.

Purchases of new houses fell in August to a six-month low as the biggest drop in prices in two years failed to lure buyers away from even less expensive distressed properties. Sales dropped 2.3 percent to a 295,000 annual pace, figures from the Commerce Department showed earlier this week.

“We at least have a couple of quarters of worsening economy in front of us,” Achuthan said. “So if you think this is a bad economy, you haven’t seen anything yet.”

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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